Actually, while not trivial, it is possible to simulate lower latencies than actually exist in reality. What the emulator does is keep a buffer of previous states for some arbitrary length of time (say, 10 frames) then, upon receiving the data, it can roll back the state to when it was supposed to have received it, add the data to the state, and run it forward to catch back up to where it was.

This is a technique used by some fighting games that have internet play, and is also used in emulators to deal with input latency on modern TVs.