A SID file is a game backup file created by Steam application that is used for downloading and managing Valve video games on Windows OS. It stores game data in compressed format and can be used backup games to storage media like DVDs and USB storage devices. SID file is created with Steam backup utility and is similar to CSD file format for storing game backup.
SID File Format - More Information
SID files are stored to disc as binary files. It is always accompanied by a .sis and a .sim file that are used to extract metadata information for restoring the backup game data.