That article doesn't explain what the WASM code does in Drupal.

I understood that Drupal/php is compiled to WASM and then run on a WASM runtime.

So no WASM inside Drupal, but Drupal run as, and in WASM.

Exactly. The Drupal code is unmodified and runs on top of the PHP interpreter compiled to Wasm [0]. The Drupal PHP code is not compiled to Wasm.