That's exactly what it means. An emulator by itself is just a program, and could be considered anything from a tool, to a preservative platform, to educational.
And much the same way we used our Betamax players and VCRs to record moves off HBO and swap them with our friends, an emulator can and will be used to play illegally pirated roms. It's legal status isn't at all tied to how people choose to use it, so long as it has other uses.
Think of it like this. A game company wants to port one of their games originally for the Super Nintendo to iOS. Instead of rewriting the game from scratch, they can write a Super Nintendo emulator and do a direct port. That might be considered sloppy, but it's perfectly legal, so long as the porting company doesn't use any Nintendo specific IP when making their emulator. And no, an emulator itself can't be considered infringing on any copyrights since the developer is only mimicking the function of the original hardware using their own code, and functionality can't be copyrighted or patented.
If you want a working example, this is what Squaresoft did when porting Chrono Trigger and Secret of Mana to iOS. They also did this when releasing the Final Fantasy collection on the Playstation way back when.
And since the law can't make any legal differentiations between functionally similar pieces of software on a whim, then every IP-free emulator has to be, by definition, legal. Whether it's one designed to run one specific game, or one that generically emulates the platform as a whole, it doesn't matter. An emulator is an emulator, and all emulators are legal, so long as the person writing the emulator only distributes their own code.