Trym Braathen's Quick takes

I lean towards a yes but I am uncertain because I don't know how the stimuli is fed and I would imagine that the simulated brain, unlike an embodied fruit fly, isn't perpetually processing information and taking actions. If the latter is true and if it replaces the need for ... processing ... billions of life fruit flies in labs worldwide, seems like a huge animal welfare win to me.

EDIT: Eon, the company behind this development published a blog post explaining their research, and after reading it, I am much less confident in my lean. This doesn't seem to be a whole fly brain emulation / a full copy:

First, the Shiu et al. model is a simplified neuron model. It uses leaky integrate-and-fire dynamics rather than morphologically detailed multicompartment neurons, and it relies on inferred neurotransmitter identity and simplified synapse models. This means that dendritic nonlinearities, biophysical channel diversity, and many specific dynamics are not represented. This is enough to recover some sensorimotor transformations, but clearly does not capture the full range of neural activity. Further, internal state, plasticity, learning, hormonal changes are largely missing. Biological flies do not respond to the same sensory input the same way in all contexts. Hunger, satiety, arousal, mating state, egg-laying state, recent sensory history, neuromodulators, and learning all reshape sensorimotor transformations.

Source: How the Eon Team Produced a Virtual Embodied Fly