It does not emulate. My org has been deprecating Vagrant ever since IT started issuing Apple Silicon as an option. Replacement is Docker Compose, or cloud VMs for software with heavy disk I/O.

Do you know if Packer is still decent for building cloud AMIs? Or do you have any suggestion for building custom images that can run on cloud platforms as well as locally?

We're mostly using multi-arch container images for that use case.

We use packer to build our images for all of Vagrant, Docker and AMIs (multi-arch) and push to the relevant registries. The packer side is probably ~100 lines of HCL, and allows us to have consistent images no matter where it's running. It's a fairly simple tool in premise and does what's on the tin, would recommend.

Is there such a significant problem with disk IO going to docker for Mac over vagrant?

Now there is overhead for mounting local volumes into the container, but I’ve found them to be negligible on my Apple Silicon Mac’s in the last year or 2. (Apple seems to have been the one to fix it with their new virtualization framework which docker for Mac supports).

Now back when they first added their APFS file system things were atrociously slow when it came to Disk IO (as in 10x slowdowns or more) and there were various workarounds but it seems resolved to me now.

Although it's the most common option, VirtualBox isn't the only supported hypervisor [1]. Maybe it will work with another one.

[1] https://developer.hashicorp.com/vagrant/docs/providers