PS3 emulation will require a lot of effort from Sony to achieve even something that could play a handful of titles, and those said titles have to be tested individually and ensure that they perform at least decently within the emulator.. Not sure how & what they're using to achieve that, but whatever it is i'm pretty sure they can't be used in PS4/PS5 for the time being..
And It's not the same as one time emulator that can handle/play every game you throw at it and with good enough performance, i don't think they're even close to this yet, maybe that'll change in the future...
Now why did they choose the stream-only option instead of allowing users to download and playing games on their consoles? Could be because the hardware is not capable (specially the PS4), and they're testing waters here to see if the interest is high enough from users that want to play PS3 games, to ensure not wasting money/resources in a service that nobody will use, specially when the "emulator" is still in early development..
