The textures themselves remain at their original resolution. But anything that was 3d rendered in the original console (like the karts and characters in Mario kart) will now have crisp lines. Additionally many emulators will support some form of texture scaling to make the original low texture stuff look marginally better. On a system like N64 it’s a toss up on looking significantly better. But on a PS3 emulator for example, since many environments are rendered in 3d, it’s a considerable improvement