But this device doesn't need a way for the user to enter the pincode. So, all the sensitive part of the terminal is probably completely isolated from the android part.

I don't know this device internal and the PED/PTS exact requirement but it seems plausible for me.

You have something like a physical compartment who include the NFC and everything needed to process it like in a classical terminal. This compartment is highly secured as requested by the specification with just a very simple interface for the android part to send the amount to bill.

I've seen a lot of each-machine running on windows. Doesn't they work like this with the windows machine just managing the display buttons to select the amount and sending this information to the secure part who handle card interaction, pincode and delivery of the money ?