Interesting that it's just an "8-bit look" but not really "8-bit". Code is written in Lua which will be either 32- or 64- bit depending on what platform the Lua interpreter is compiled on.
(From the name, I went to read the docs, because I thought they emulated an "ideal" 8-bit processor, too.)
Yeah, it's all on the Lua VM. It does behave kinda like an 8-bit computer in that you can go poking around in the RAM to create various effects or glitches.
One difference here is that Japanese characters can be combined in various ways to create different words, so the 777 characters can be used to create many more than 777 words. Compare with the Simple English Wikipedia which strives to use only the 1000 most commonly used English words. I think you'll find that that experience quite a bit different from reading a typical English language newspaper.