They're using Kodi only for the front-end, in the back-end they're still using the same emulators and libretro/Retroarch to play the games - https://seedisystem.com/about/seedi-open-source-software-information/ .
The only novelty here is that they're introducing the CD emulator to read the data from the physical device and - I'm just guessing - present it as a regular pair of .cue/.bin files for the emulator to understand.
They're also promising (the same page as above) that they'll open source upon launch their CD emulation layer, so maybe there is hope in the future (if their project succeeds).