In addition to hardware capabilities and responsiveness mentioned by others, the performance data (CPU usage, memory usage, battery usage, etc) of a real device will be vastly different than the emulated version. In addition, emulators typically do not run manufacturer or carrier ROMs, meaning that the behavior on the emulator often differs from the actual device.

For testing initial layouts or on-the-fly development, emulators are fine because they offer instant local access (After the setup, of course, but who cares now that x86 emulators are so fast). For complete testing real devices are a must. That's traditionally been expensive, but there are solutions to that, such as the company I founded, AppThwack, and our competitors like TestDroid. Test locally on emulators, and test periodically on real consumer devices.

There's a reason nearly every development shop has a cupboard full of devices, and it's not because they couldn't figure out how to get a few emulators running.

The answer is: it depends. This is an android emulator - the same that Google ships with the Android SDK. A real device will probably be more responsive.

You will also have the difference of a touch based interface on a device and the emulated touch interface when using mouse-based devices (Manymo in your laptop/desktop browser.) That said, You can also use Manymo on your iPad...

In any case, having a device with the all screen size and OS version combinations does not really scale. Trying to do that gets rather expensive.

I'm assuming 'this' is any emulated device and not specifically Manymo (which I haven't tried -- I keep getting the "Fail Droid"). But there are plenty: you can't test bluetooth, get network state, check battery status, and other things.

But emulators are ok to test your layouts, even though the latest ADT plugin makes it much simpler with layout previews.