[Cyph0n]

There are some instructions that are not privileged but may leak information about the host environment to the VM. Such instructions are referred to as sensitive instructions. To prevent sensitive instructions from being misused inside the VM, they are emulated.

Another explanation is that some older x86 processors may not have full hardware virtualization support, so Xen emulates the instructions to support a wider number of host configurations.

I may be completely wrong though.