An OS emulator plays a pivotal role in software development by allowing developers to simulate one computing environment on another. This functionality is crucial for developing and testing software across different operating systems without the need for multiple physical devices. Emulators replicate the hardware and software environments of devices such as mobile phones, tablets, or even other operating systems on a PC.

Differing from a virtual machine, an OS emulator does not rely on hardware virtualization to run applications. Instead, it reproduces the behavior of the hardware and software. Virtual machines, on the other hand, create a complete virtual environment including a virtual processor, memory, and other hardware resources that allow running a full operating system instance. Emulators are typically used for applications targeted at specific hardware or systems like gaming consoles, mobile devices, whereas virtual machines are used for broader purposes, including server consolidation and full OS testing.

The power of an OS emulator in development extends to its ability to debug, simulate, and test software under different hardware/OS configurations before actual deployment. They are especially useful in mobile application development, where emulators like the Android Emulator enable developers to test their applications on a variety of Android devices and OS versions without needing the actual devices.