I agree, it would probably be necessary for everything to live in the docking station other than storage. You'd basically be transferring the live system state, which would then take over from the portable device.
The idea here is that you can "convert" your mobile device into a powerful desktop, though in reality you are just moving the current, live state from mobile to desktop.
That is what some people have conjectured is in the works with a "Surface Phone," although it's really anyone's guess at this point. But it certainly is very appealing. With this new emulation news, the use-case could be that you can run your x86 apps (slowly) in a pinch while out and about. When you get home or to the office, you dock up to get a full-powered PC experience.
The idea here is that you can "convert" your mobile device into a powerful desktop, though in reality you are just moving the current, live state from mobile to desktop.