Pardon a simple question - this implies nested virtualization, or is the second step emulation?

The download is a Linux VM, gotcha.

Are other OS-s nested virtual machines inside that Linux VM, or emulators (in which case, holly mackerel, that is even more impressive :O... and also why??).

Readme seems to imply it's emulators, but it also uses the words "virtual/virtualization" or "VM images" liberally sprinkled.

I imagine the author's using OpenSIMH (https://opensimh.org) or something similar, so it'd be an emulated CPU running the userlands.

I have a container that runs a 4.3 BSD userland using opensimh; it's not super hard to set up, just takes a bit of patience and willingness to learn how opensimh works.