SIMULATOR VS EMULATOR

1. Simulator:
Suppose you have written assembly program in a file and corresponding exe
file is ready. The simulator is the pc software which reads the instructions
from the exe and 'minmics' the operation of the processor.
2. Emulator:
Emulator is a (PC software + a processor). The Processor can be plugged into
the TARGET BOARD when you want to test the developed software in real time
to check run time bugs. When not in use it can be unplugged. The Processor
will have a parallel or JTAG interface with the PC for downloading the exe
file for execution.

Hence, whereas the Simulator is slow in execution, Emulator will be able to
give real time verification of the developed code.
Generally you will test your developed code on simulator first and then go
for checking on emulator.