For those who don’t care, it’s an emulator.
For those that do care, it’s not trying to emulate the actual hardware of the xbox one it’s just translating system calls to work on normal Windows PCs. WINE, the inspiration for the name, stands for WINE IS NOT AN EMULATOR so they probably didn’t want to call it one. But you could call it high level emulation if you want.
Now that the Steam Deck and linux gaming has found some success I really hope Valve or someone else revisits the home console market with a similar approach.
You couldn’t really build a PC for the same price as a PS5 with the same performance unless you’re buying used parts in most places but that’s not because Sony is selling consoles at a loss right now like the olden days. A large system integrator like Valve (or xbox if they want to change their formula) could offer similar perf/price without all the downsides of these locked down consoles.