Sorry I have to nit pick this because it drives me nuts.
Yes, you are nit-picking a little bit. I am aware how FPGAs function, and that the term "simulation" would probably be more accurate than "emulation" where they are concerned. They provide a large number of programmable gates, and you can program them to essentially behave like different integrated circuits. This makes them immensely flexible, which is where their utility in the marketplace comes in.
They are useful for "simulating" older video game systems as they can be programmed to essentially mimic the original hardware flawlessly. So long as the FPGA in question has the necessary number of gates to replicate the functionality of the system you're targeting, you're good to go.
FPGAs prices have been fairly static as of late, as they have not yet been extensively applied. I expect that to change over time, as the need for flexibility starts to outweigh specialized power. But for now they tend to be a bit pricey, which is why we haven't seen them used for a 16-bit video game system clone just yet. Also, 16-bit systems would take more time and effort to map out effectively. The programming for an FPGA is where the vast majority of the work lies.