What is Emulation?
Emulation is the ability of a program, or device, to run applications or games from another device. A perfect example is the NES.emu application, which allows users to play Nintendo Entertainment System (NES) games on the OUYA device.
Emulation on the OUYA
The OUYA device has the ability to play games from several older gaming systems; ranging from the Atari 2600 to the Playstation (PSX). Emulation is useful as it does away with the need to have dozens of devices to play your catalog of games. It allows you to play all of the compatible games on a single piece of hardware without the large footprint of having all of the corresponding systems hooked up.
Legal Issues / Roms
To play a game or application in an emulator, such as the OUYA, you will need a ROM file, which is the software equivalent to a game cartridge or Compact Disc (CD/DVD/Bluray). These ROM files can be obtained from several websites around the web at no cost to the end user.
However, The practice of downloading ROMs of copyrighted games remains an extremely gray area in the realm of legality; the legality varies based on the end user's country of residence. In most circles the argument in favor of ROMs is the games in question are out of circulation or unobtainable by normal means. However, there are very few game publishers that share this view, as seen by Nintendo's legal page regarding the matter.
One thing to be aware of is there are 100% free and legal ROMs available on the internet. There ROMs are normally provided by the game or application's developer, also known as "Homebrew".
How do I install ROMS?
Since ROMs are nothing more than files, you don’t technically install them like you would a normal Android game or application. To play a ROM simply Sideload it to a folder on your OUYA using a USB cable or Thumb Drive. Afterwards your emulator can search your OUYA for that folder then load the file.