Most ICEs consist of an adaptor unit which sits between the host computer and the system to be tested. A large header and cable assembly connects this unit to where the actual CPU or microcontroller mounts within the system to be tested. The unit emulates the CPU, such that from the system's point of view, it has a real processor fitted. From the host computer's point of view, the system under test is under full control, allowing the developer to debug and test code directly.
Most host systems are themselves unrelated to the CPU used for development - for example, a Windows PC might be used to develop software for a system using a Motorola 68HC11 chip, which itself could not run Windows. The host system uses a cross compiler or cross assembler to do this.