When one tries to really nail down the exact, precise, 100% accurate definition of "what an emulator is", one finds it is like nailing jello to the wall.
I've seen several people online discover what the idea of an emulator is, and then they'll say in amazement "so we could do this and that and the other?", and the answer, no matter what it is they propose, is "yes, someone's done that". Recompile the code entirely into another assembler? Partially do so? JIT it? Ship specific patches for specific content? Emulate gates? Rewrite on the fly? Shim things slightly to change what functions are loaded? All that and more has been done. And even if you draw a sharp line through those things, all the combinations you can think of have also been done, and how will you draw the line through that?
I think one of the best ways of thinking about it is that there really isn't any such thing as an emulator. There's just numbers, and they need an interpreter and the ability to reach out to some set of externally-defined functionality, and there is a profound sense in which you have to have some particular hardware manifestation of an interpreter and some functionality to get anywhere, but that particular manifestation is a lot less important than people think. This has only become more true in a world where your CPUs are already not actually executing assembler opcodes anymore, and your OS is already shimmed away from the hardware in another level, and the OS is wrapping your program in yet more abstraction before it even runs a single instruction, which may well include providing a choice of which sets of "externally-defined functionality" the numbers can ask for (different Windows subsystems, etc.). Even the "base system" has a lot of "emulators" in it nowadays. It's emulators almost all the way down! Which suggests that rather than being special, they're actually quite fundamental, and sure, sometimes you need a greater translation layer between this program written with these numbers and this particular chunk of hardware and sometimes you need less, but it's a lot less a distinction of "kind" than you might think.
This is not the only way to think about it; there are certainly valid perspectives from which "emulators" exist, e.g. as a distinct category in a software catalog they're sensible. We all know what that means. But for your own understanding of how the world works, the previous paragraph has a lot to recommend it.
Indeed, it was a backronym. I'm glad they finally got rid of it, because it was untrue, and because it continues to be the source of unpleasant exchanges online.
Wine doesn't emulate hardware, but it absolutely does emulate the Windows runtime environment. (In fact, it wouldn't work very well if it merely implemented APIs based on a spec instead of emulating observed behavior, since some of the bits required for compatibility are undocumented.)
Unfortunately, that phrase was in fashion at a time when a lot of people first discovered Wine, so there is now a generation of enthusiasts incorrectly chiding people who refer to Wine as emulation. And, of course, others who see this happen and don't know any better sometimes go on to perpetuate it themselves. Makes me sad every time it crosses my path.
