Playstation 3 emulation is actually further along, better performing and with better compatibility than the Xbox 360 emulators on PC.
The Cell isn't holding anything back there.
The Cell is a relatively simple CPU compared to the large mult-core, SIMD-rich CPU designs of today... When it first came out and Dual-Cores were all the rage, then sure, it looked complicated, but we have moved on from 2006.

The fact that backwards compatibility isn't comprehensive is a massive downer on Xbox's efforts, this was always going to happen with a curated approach though, the logistical efforts required to do the complete ecosystem is massive.

But the benefits to it are improved visuals and performance as every game is thoroughly tested and that can be super important to some people.

Lol I knew I’d see this rather tired excuse. Just because it doesn’t translate into a massive sales boost doesn’t mean people don’t want it. This may come as a surprise but there’s actually a lot of factors that go into how well a console sells relative to another.

I admit it’s not universally used, but many love it. I like the idea of my library carrying forward. Of being able to play a game I missed back in the day. Just beat Skyrim a month ago, and now plan to play backwards with Oblivion and even Morrowind. I’m glad Xbox gives me access. Frankly the argument to turn your back on great games just because they are old is not a stance I agree with at all (just because the majority of casuals don’t care as you said)

Lol.  I just got through typing this in another thread but it applies here as well.

I have a large physical collection in PS3 games.  At launch of the PS3 I purchased the fat PS3 that had the backwards compatibility with PS1 & PS2 games.  I didn't have a PS1 library at the time and didn't accumulate one.  I did start buying up PS2 games though and enjoyed that I could play both PS2 & PS3 games on it.  I eventually suffered the yellow light of death.  I did use it quite a bit.  It was my main Blu-ray player for movies and I feel like the PS4 Blu-ray player was a downgrade. 

When I went to replace this item I found out that later SKU's were only able to play PS3 games and were no longer built for backwards compatibility.  I ended up buying a PS3 slim and as PS2 slim silver to replace it.  The PS2 slim is still wrapped up in it's original packaging and is now worth a shitload more than the $120 I paid for it.  What sucks though is that the hardware is continuing to age.  The electrolytic material contained within the capacitors will dry out whether it's being used or not.  I would have loved backwards compatibility to at least the PS3 games.  

Now I do have quite the backlog on my PS4 and where it has always given me guilt when I stare at the shrink wrap still on most of them, I'm now thankful for it.  I now get to experience my backlog in a higher resolution and frame rate.  Same with the competition's backlog.  As a physical collector the backwards compatibility was a major selling point.  And sometime down the road all old hardware will eventually fail to work.  A complete backward compatibility console would be a device that would, and will continue to interest me.  PS3 had some of the best RPG's and PS2's RPG's to this day are unrivaled. Give me PS4 games optimized to take advantage of PS5's hardware, or at least mine that remain unplayed.

Sorry for the back to back posting.

I have been purchasing a ton of Xbox One games now to take advantage of the backwards compatibility upgrades to give me the best possible experience.

Metal Gear Solid 4? inFamous 1 + 2? Heavenly Sword? Puppeteer? Ratchet & Clank Future: Tools of Destruction? ICO HD? Sly 4?

I'm a collector of video games and I still don't understand the stance of not supporting backwards compatibility. The PS5 should have all generations supported on it.

This whole thing is a super smart move.  I wish they did the same thing going from PS3->PS4.  I also wish I could play my Virtual Console games on the Switch.

Video game systems have not been terribly pro consumer in the past when it comes to transfering games to the next system.  This is a move in the right direction.  This should be the standard for all console makers going forward.

Well, to you it's "tired," and to you it's an "excuse." But for the rest of us, it's history.  Yeah, I get tired of saying "George Washington was the first president of the United States of America."  Not because I disagree with it or thought it was wrong.  It's established history, and there's no way around it.  We all know it.  At worst, I made a generalization, but it's backed by history.  Backed by facts.  If you want to propagate and sell tickets to the Historical Museum of Xbox, go right ahead.  Nothing wrong with that.  But there is also the Natural Museum of Console Gaming.  Just saying.

Based on what Sony has said, seems like the emulation isn't being optimized for most titles, so you want to "try it" on each before downloading additional content. Yeah, rather not...

WTF? Please please quote Sony discussing emulation for this. There is no emulation, emulation==/==compatibility.
It is AMD x64 hardware specifically retaining last-gen hardware pathways to directly enable full compatibility.
They now released the list of stuff that won't play, which seems mostly an issue of licencing on those games.
Some games can benefit from extra performance with PS5 power, that is total bonus beyond full compatibility.