Emulation is the process of the replica of the visible behavior in order to match the existing target. The inner state of this mechanism does not need to reflect the internal state of the target precisely. The emulator is used in order to emulate.
Simulation, in fact, involves modeling the inner state of the target to which stimulation is done. The end result of a noble simulation is that this mechanism will emulate the target that it is simulating. A simulator does this process.
Except for the actual definition, the other points of difference between the Simulator and an Emulator are:
Time of Operation: An emulator will always have to operate close to real-time. But a simulator need not always do so.
Other Names or Synonyms: Simulator mimics while Emulator performs. This is why simulators are called recreators while Emulators are called Performers.
Literal translation: Emulation comes from æmulus and is related to "imitate" and "image,". "Simulation" comes from similes "like", the word "similar”.
Software and Hardware Terminology: A ROM emulator model would be software instead of hardware. The existing MS Flight Simulator is nearly opposite to this.
The rules of emulation are fixed and cannot be changed else, the system fails. But simulators are at ease with such an orthodox approach in rules.
Hence, not only their literal translations are different, even the operations of these two are way different.