The Form ISO 8583 input mode is specific to the Message Responder tool. It allows you to define and parameterize ISO 8583 payloads (message body and header) via a graphical interface. It works similar to the Form Input, Form JSON, and Form XML views. As with other form views, field values can be parameterized with data source values.
If you paste an ISO 8583 message into the Literal view, then switch to Form ISO 8583 view, the Form ISO 8583 view will automatically be populated with the provided values and show a graphical representation of the message. Switching to the Literal view will apply the contents of Form ISO 8583 to the Literal view.
See Using ISO 8583 for details on working with ISO 8583 messages.