No, AlphaVM does not emulate Tru64/Digital UNIX. AlphaVM emulates Alpha hardware and can run Tru64/Digital UNIX as the guest system.
AlphaVM emulates the whole Alpha system with the CPU, memory, chipset, SCSI controllers disks, etc. OpenVMS runs on the AlphaVM virtual machine as on a real Alpha machine.
AlphaVM can be used to replace a real Alpha system. The applications software will run on AlphaVM unchanged. Tru64 may need some reconfiguration to run on new virtual hardware.