Correct - the instructions in the Windows PE executable run natively. WINE provides a PE loader for exe and dll files (https://github.com/wine-mirror/wine/blob/master/dlls/ntdll/l...) and provides its own version of the API (user32.dll, kernel32.dll etc)

Doing windows API is emulating windows

> In computing, an emulator is hardware or software that enables one computer system (called the host) to behave like another computer system (called the guest).

https://en.wikipedia.org/wiki/Emulator