It seems to me the mentioned "Principles of Operation" document describes a virtal machine compatible with good old System/370 what's now known as IBM z/Architecture. But the Telum CPU itself runs on Power10 cores or alike RISCs.
You might be confusing it with the AS/400 CISC ISA, which exists as an emulation layer on top of POWER, since all IBMi machines are almost identical to their POWER counterparts.
The AS/400 / 'i' are descendants of the System/38 and implement a "Technology Independent Machine Interface". Applications target this high-level interface, rather than the underlying hardware. Before first run (or when they're installed?) applications get compiled from abstract Machine Interface code to native code.