The System project has three different build targets: software emulation, hardware emulation, and hardware. As described in Build Targets, each of these targets has a specific use and each requires progressively more time to build.
Software emulation is a functional simulation of the system components for evaluation of the behavior of the system.
Hardware emulation is an RTL based simulation of the system with more accurate resource and performance estimates.
Hardware provides actual performance of the system on the hardware accelerator card or embedded system.