This is just a static recompiler or ahead of time recompiler, except instead of directly targeting machine code, it's targeting C/C++ as a type of portable assembly. It basically just looks like a bunch of macros implementing the behaviour of powerpc instructions.
The recompiled result will preform nowhere near as good as a proper manual decompilation project, it's still baking in a huge number of quirks from PowerPC and the compiler they originally used, and will have noticeably worse performance. But, performance will usually be good enough, and it's easy to manually replace any bad code-gen that shows up as a bottleneck in profiles.
And while they did replace a bunch of graphics/audio code, they are still directly emulating a bunch of the original Xbox 360 Kernel and hardware.