Although butter is not inherently emulsified, it is often done so for certain recipes. To emulsify butter or anything else for that matter is to put two or more liquids that can separate from each other together. One example of emulsification would be putting water and oil together because they will obviously separate from each other rather easily.
Sometimes people emulsify butter into various other ingredients. There are different types of emulsification agents that are used in cooking, such as the egg yolk which is perhaps one of the most common because it contains so much protein. In order to for one of these agents to be successful in emulsification, it must consist largely of protein.