Apparently the Phoenix is built on an FPGA (Field-Programmable Gate Array), which means the "core" is essentially a reproduction of the original hardware. Unlike with emulators, FPGA chips are capable of physically replicating actual hardware. For example, an FPGA can be setup to contain the same transistors and architecture as an Zilog Z80, and the circuits on the motherboard to take advantage of it.
What's interesting about this is that you could, theoretically at least, reconfigure the FPGA to act like a different system. So it could replicate a 2600 one day and a C64 the next day.