In the simplest case, an index would be a contain the key values of the records and the address where the record is stored.

The index file would be a sequential file, with the index records stored in key value order. This makes the index easy to search.

An indexed sequential file is a sequential file that also has an index. This would allow sequential access of records as well as indexed access.

A company might store an employee file as an indexed sequential file, because...

Sometimes only one record needs to be accessed ...
... an employee changes their address...
... use indexed access.

Sometimes all records need to be accessed...
... the end-of-month payroll is run...
... use sequential access.