for how GCN on the WiiU works is much like WINE for Linux as in It's not Emulating Jack Squat its an Compatibility Layer thats talking Directly to the Existing Hardware translating between the WiiU's Newer OS to what it was for the GC thru vWii if that make's Sense.
Emulation: is in a tl:dr recreating bit for bit the processes of each every chipset and instruction of the intended target (be it a Console, a handheld, a piece of specific hardware.)
Virtualization: well rather than explain in detail take a look at a Virtual DVD Drive it's not emulating a Specific entirety random physical drive from a random Manufacture, More its a Driver that contains all the instructions needed to tell the operating system to interface with it and to treat it as if it was a real drive this is What GCN Compatibility on the WiiU is doing thru vWii More or less anyway. its the Same process the PS3 is offering PS2 Compatibility on "Most" of its "Phattie" SKUs (US/UK/JP 20GB and 60GB, while these regions's 80GB Models had the Physical GPU and Emulated the CPU (granted the PS3 "CELL BE" was powerfull enough to do that) but in doing so Compatibility suffered