There is a greater overhead and a limited scope when using paravirtualization. But that doesn't mean it is a relic, in fact you can try it right now in Virtualbox. I also believe that the Linux KVM has para-virtualization optimizations if the guest is Linux and the bare metal doesn't support hardware VT.
Well, after Googling, I can’t find the exact quote that referenced new hardware in live blogs, but it’s telling that just before they did a demo of virtualization, Maya and so on, they said, “All of the Big Sur features demonstrated earlier were being run on the development platform” according to Anandtech — meaning the earlier Big Sur demo was on the A12Z but the next part would be possibly newer hardware.
My guess: Parallels on Apple Silicon will support virtualizing AArch64 VMs, and also x64 VMs through Rosetta 2. Support for AArch64 alone doesn't seem interesting enough to keep under wraps, and Apple did commit to supporting x64 JITs, so x64 VMs seems like a natural extension.
A user-level emulator is a completely different beast performance wise than a full system emulator. With a user-level emulator the kernel, and possibly even the shared libraries are native code, and the code that needs to be emulated is relatively easy to translate from one architecture to another.
For a full system emulator not only you need to emulate the kernel also, but all the system-levels instructions have to be emulated as well (unlike user space instruction that can be JITed).
Just compare the performance of qemu-system-aarch64 with qemu-aarch64 running on amd64, and you will see a MASSIVE difference in performance. It's very likely rosetta will be more optimised than qemu, but still there is a fundamental problem here.
I'm sure qemu-system-x86_64 will run on aarch64 macs, but I doubt Apple/Parallels/VMware will touch this space.
