You're quite right. Tilengine is designed to emulate the inner working of 2D VDPs, so it has all their features. I preffer to say "features" than limitations because it's a very different way of rendering graphics compared to modern GPUs. But obviously this kind of graphics are technically more limited, of course.

It's not a full game engine, only a graphics engine: it doesn't offer sound or any other feature that would be outside of a graphics chip.

It's not an emulator of a particular hardware either: it's based on their working principles but it's a fresh implementation from the ground up.