Here is a quote from this article:
ISO 9660 is not a complex file system, but has a few quirks that are worth remembering. It seems that some operating systems also create non-compliant CDs, so beware! The main example of this is the character set that is available for file names. Strictly,filenames may only consist of uppercase letters A-Z, digits, dots, and underscores. Further there is a semicolon which separates the visible file name from its version number suffix. Many operating systems also allow lower case letters and other characters. Linux's VFS displays lower case filenames to the user despite the CD contents actually containing upper case characters.
So my question is, how does Linux know which letters are supposed to be uppercase and which letters are supposed to be lowercase, when on the CD they are all uppercase?
The ISO9660 filesystem has only supported filenames in the 8.3 uppercase format.
Some technologies have been designed over the years to extend the ISO9660 filesystem with features like long filenames, lowercase letters, and file permissions. The Joliet filesystem is the Windows solution, while Rock Ridge is one that works with Linux. In essence they store the original filename, with proper case, in a lookup table that is recorded in the removable media. More information in the Wikipedia article for ISO9660.