what type of processor emulation does ppsspp use?

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As far as kernel modules, these are modules the kernel loads in. They still require memory, so the code is not always loaded - keep in mind, the PSP is a fairly memory constrained system. So for example, games will often load various modules before playing a video, and then unload them once done - playing a video consumes a good chunk of memory.

The kernel modules are dynamic, that is, they are not all just part of the kernel. PPSSPP acts as if they are, though, and does only some basic tracking of when the dynamic load/unload happens. Technically this is incorrect.

Bigpet's examples are great. I just want to add one: imagine you read a book, and it really moved you. Because of this, you decided to write books to move other people in the same way. Although that's very much simplifying the issue, in general it seems like the most basic example of "emulation": trying to accomplish the same goal as something else - but with your own, completely different content (in this case, code.)

After all, all books seem to have settings, premises, characters, and the like. How is it legal for them to copy that structure off each other?

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