It doesn't look like this is emulating Atari 2600 games, if only because the form factor of the watch (vertical orientation, ballpark 3:4) is the exact opposite of the old console. These appear to be native ports to whatever hardware the watch is running.

Also, is this not just a bad product? Why would anybody want to play games on their watch? Most people already have another device in their pocket that's going to offer a better experience.