It's using real physical cartridges, but still running emulation underneath. Which is unfortunate. Maybe recreating the actual 6502-based hardware would be infeasible at a large scale (although WDC is still making 6502s at a small scale last I heard) but an FPGA could provide a hardware-perfect experience that no emulator could match.
I'd wonder if the idea of a cycle-perfect emulation for a 2600 is a poor target.
It doesn't just rely on cycle-accurate timing of the chips themselves, it's abusing the old analogue TV formats to do its magic, and nothing that plugs into a HDMI socket will exactly emulate that trickery. It's up there with hacks like "CGA could eke out extra colours through dithering and hacking the colourburst on composite outputs."
OTOH, the actual delivered goods by the 2600-- even late, better titles, are pretty anemic, so maybe we're not missing much magic.
MiSTer can do pretty close to cycle-accurate 2600/7800 emulation. Postprocessing can include emulating the effects of composite video and projecting realistic scanlines and shadow mask, etc. (Of course, you can plug it into a composite monitor, too).
