Emulators like epsxe and pcsx2 use the original disc data. How come X1 can't do the same? Why does it need to download an "emulator compatible version"?
It's a pretty difficult answer to explain in full-on technical detail without putting someone to sleep, but a rather simple answer at the same time: the reason seems to be a mixture of the technology used in XBONE vs XB360 is very different, so rather than manufacture and include the hardware to read the disc directly, its simpler and more efficient in design as well as overcome some of the licensing issues that would impede delivery, to emulate older hardware with the newer one.
Reading the code from disc means the data has to be read, parsed, converted, re-parsed, and then executed. Emulation is preconverted because it's just a complex set of "if x = y, then Z, while x is y" and from there, x is whatever it needs to be in that instance and can be expanded or improved upon over time. A direct read, isnt going to do that, especially with sound and graphics handling.
Emulation isnt new on consoles. The PS3 originally had hardware to run previous model games, and then switched over to pure software emulation. Though PS3 didn't require downloading PS1 or PS2 discs and had short loading times, the conversions were on the fly and sometimes suffered in quality. I'm far from an MS fanboy, but would assert a preload (completely doable on something with the power of an XBONE for XB360) overcomes a quality issue when emulating on the fly from disc in that MS can simply drop a ln update to the emulator instead of having to change the hardware for better performance down the road.
It just implies the HDD reads all game assets from the drive and has faster access instead of relying on the spin up and read speed of physical media, and from there MS can wrap the emulated output in a way that makes the experience better overall (from a developer POV).