It's almost burying the lede to announce that, though, because the real meat in this entry is how the Commodore 64 manages to emulate a very different 6502-based system. That piece is "6o6," for "6502-on-6502," and is a full virtualized software NMOS 6502 CPU that runs on a 6502 CPU — which I've open-sourced too. It has full control of guest code execution, including trapping undocumented and jam opcodes, and completely abstracts all memory access, making it possible to remap addresses, intercept illegal reads or writes, or even run entirely from virtual memory. On top of that, it's complete enough to not only pass a full functional test but also virtualize itself virtualizing itself:
These GIF screencasts are real-time with no tricks. Here a Commodore 64 and Apple IIe are both running a guest "hello world" payload within 6o6 (stage 1), which is nearly instantaneous, then 6o6 running the payload as a payload within another instance of 6o6 (stage 2), which is a little slower, then 6o6 running 6o6 running 6o6 running the payload (stage 3), which is glacial. But all of it works!