Indeed, it was a backronym. I'm glad they finally got rid of it, because it was untrue, and because it continues to be the source of unpleasant exchanges online.

Wine doesn't emulate hardware, but it absolutely does emulate the Windows runtime environment. (In fact, it wouldn't work very well if it merely implemented APIs based on a spec instead of emulating observed behavior, since some of the bits required for compatibility are undocumented.)

Unfortunately, that phrase was in fashion at a time when a lot of people first discovered Wine, so there is now a generation of enthusiasts incorrectly chiding people who mention Wine and emulation together. And, of course, others who see this happen and don't know any better sometimes go on to perpetuate it themselves. Makes me sad every time it crosses my path.