Analogue likely doesn't emulate the hardware at the transistor level, as it's far more difficult than doing what most software emulators do.

From an interesting (altough non-conclusive) HN-thread [1].

Without seeing the code, it's impossible to know where Analog's implementation falls on the spectrum of software emulation vs hardware simulation. There is nothing magical about FPGAs that automatically makes anything developed with them a 1:1 representation of real hardware. In fact, there are plenty of instances where the FPGA version of a particular console is literally just a representation of a popular emulator only in verilog/vhdl. In many instances, even the best FPGA implementations of some systems are still only simulating system level behavior. Off the top of my head, one famously difficult case is audio, where many chips have analog circuitry that cannot be fully simulated.

[1] https://news.ycombinator.com/item?id=37901381

FPGAs would be considered “hardware emulation” but a lot of people don’t like that term, and think emulation should be a term limited to software.

Like, there aren’t real N64 chips in there. The hardware IS emulating an N64 - it’s just not doing so in a way that’s comparable with software emulation at all.