Well if the game has an update that you want to install then you can (you have the option to attach PKGs in PS3GEN) but you don't have to. You can then just stick it in and play.
I don't think anybody ever bothered with a list.. it definately doesn't work with all games. compatibilty is kind of low so I'd burn to rewritable discs 1st.
I had Dirt, Wet, fracture, COD MW and a few more games working but most I tested didn't work. you can also try booting the disc with multiman.