Okay the other person is onto the right path but not for the right reasons.

The 360 used a PowerPC architecture, which at the time was very cost effective at the time. Pretty much most things now use x86, our standard 32-bit and 64-bit CPUs are this architecture. (ARM is another type that we are seeing now).

Now, you cannot run code from one PC architecture to another, even emulated this is a very costly procedure, every call to the CPU, every call has to be translated. Even with emulation this is difficult. (Note how we’re still just now getting 360 emulators).

This is mostly why Microsoft and Sony both said no to backwards compatibility, because there was no simple way to take a disc, pop it in, and play.

So after the massive backlash (which they deserved, but also was understandable their point of view), Microsoft created their backward compatibility program. Essentially what they (or developers, not sure who did it) did, was to literally re-compile each entire game for x86, instead of PowerPC. They would then upload the bits to Microsoft, and that is what you download when playing. The disc you insert is purely for checking that you own it, after that you ignore everything else and download the x86 version which is runnable on your console.

So, it stands that backward compatibility wasn’t feasible, it still isn’t “backward compatible”. They rebuilt everything from the source code to run. A pretty massive effort on Microsoft’s part and the developers just so we could play old games. Hopefully you see too why I don’t blame Sony for not going through all of that, it’s a lot of work.