Emulators are often used to play games that are no longer in product, but nowadays, they are also emulating brand new systems. Examples are XBox, PS2, and GameCube emulators. While none works yet, all are beginning to play commercial games well while some other commercial games are played well already. However, the Gameboy Advance emulator came out BEFORE the actual handheld did and it emulated it excellently.
The biggest problems with emulator is speed and compatibility. Emulators need PC much more powerful than the actual system it's emulating in order to run at full speed. Also, some emulators tend to sacrifice compatibility for speed or vice versa.
Some notable things about emulators is that you need ROMs to use it. However, ROMs are completely illegal. The rumor that you can own a ROM if you own the original is false.