The PlayStation 4 has no hardware nor software emulation on the console, which means only a PS4 disc will play.
Sony has confirmed that the PlayStation 4 will be able to stream older PS1, PS2, and PS3 games. However, it has now become apparent that there really is no native PS3 disc support. If you insert a PS3 Blu-ray game into your PlayStation 4, it won’t play.
In other words, there is no hardware or software emulation on the PS4 — all PS3 games will be processed on a server at Sony, then streamed to the player.
The PlayStation 4 will use technology from Gaikai to stream older games to the new system. Sony has also confirmed that not all PS4 cloud services will be available at launch, and that they would be rolled out gradually after the console hits the stores this holiday season.