Fat binaries contain both ARM and x86 code, but I was referring to Rosetta, which is used for x86-only binaries.

Rosetta does translation of x86 to ARM, both AOT and JIT. It does translate to normal ARM code, the only dependency on a Apple-specific custom ARM extension is that the M-series processors have a special mode that implements x86-like strong memory ordering. This means Rosetta does not have to figure out where to place memory barriers, this allows for much better performance.