This is called a Null Modem Cable , which fools the DTE into thinking that it is connected to a DCE device. In this case, modems are not used, so the cable must cross corresponding signals to make the connection work. It is placed between the DTE and the DCE devices, so you can see the state of the various signal lines and perform interconnection if required. Using the breakout box is a matter of determining the signals being asserted and performing interconnection of signal lines if required. LED's are used to indicate the state of the signal line.
Emulation done in software is terminal simulation .
But, since most software vendors use the term emulation to describe the terminal simulation their software performs, we will use the term terminal emulation for emulation done in hardware or software or a combination of both. Terminal emulation enables a user to communicate with a host system that expects a specific type of terminal. Terminal emulation usually pertains to keyboard key assignments, screen display controls, and communication protocols. As emulation is achieved by modifying the data stream, a good emulation translator can causes the PC to act almost exactly like the type of terminal the host expects.