Packetized Elementary Stream
A Packetized Elementary Stream (PES) is the basic format by which streams of audio or video, and other content such as subtitles, are stored within MPEG-1 or MPEG-2 data. A stream may be stored in a file by itself, or in container format such as MPEG Program Stream.
A DVD has its content in a whole series of these. The VobSub program grabs the PES packets on a DVD that represent subtitles.
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Disambiguation
It's not entirely clear whether the term/concept Packetized Elementary Stream is used with both MPEG-1 and MPEG-2, or just MPEG-2. Wikipedia's Packetized Elementary Stream article clearly implies it's just MPEG-2, but Wikipedia's MPEG-1 article says it's used with MPEG-1. In any case, we need a name for all the single-stream MPEG-1 .mpg files that do not use the MPEG Program Stream format.
Some sources (e.g. Wikipedia) seem to distinguish between a raw Elementary Stream (ES), and a Packetized Elementary Stream (PES). Others (e.g. PRONOM) seem to use the term Elementary Stream to refer to a Packetized Elementary Stream.