It uses its own real-time typesetter specifically designed for WYSIWYG editing. The typesetter is not TeX but is inspired by it.
That actually makes me much more interested in TeXmacs, since an independent implementation puts it at the same level as something like SILE (with a very different user interface story, of course). Now I'm quite curious to check it out to see what kind of quality I could get out of it.
Looks like the naming is a topic for discussion in the community: http://forum.texmacs.cn/t/why-some-people-get-upset-when-the...