While people say SMS is purely emulated, I think it's not just like SMG. Except SMG's code is statically linked into the main executable, while SMS's code is in an NRO file (actually it's of type .nrolz, located in romfs\data\gekko\MarioSunshine\nx\MarioSunshine.nrolz, from the extension seems like it's supposed to be an LZ compressed NRO0 but I've not been able to find a tool which decompresses this LZ variant (perhaps it's just Wii LZ but in LE?)). There's also a .nrr folder which further suggests that nrolz file is actually an NRO.
But there clearly seems to be some sort of emulation going on...but I have a wild theory; what if they actually recompiled the source code for ARM (actually SMS is Aarch64, while SMG's main executable seems to be for 32-bit ARM) and just emulated the rest of the Wii/GC h/w. Theoretically this would make the emulation much easier, as there wouldn't be a need to translate PPC to ARM on the fly...but that's just a theory XD
What I should also mention (and I bet someone else has noticed it already), while SMS has a GCM disk image, it's actually NOT a vanilla SMS image. It has folders for all the supported languages, cutscene THPs only have audio (just like SMG ones, cause video comes from the MP4s), and if you boot this GCM in Dolphin it runs in 16:9 by default.
Also the "emulator" seems to be named "Hagi", with the whole project seemingly codenamed "Stardust".
Another interesting tidbit that I've found is that (in SMG at least, haven't checked SMS yet for this) seeming all files have their endianness flipped to LE, which really suggests that SMG has been recompiled for ARM, not being translated from PPC.