HSMs satisfy the requirement for key material to be isolated from other operating systems and application processes (1.05.2.2). Trusted Execution Environments (TEE), air-gapped devices, network isolation measures among others are equally acceptable.
Their hardware-based encryption satisfies the requirement for key material encryption (1.03.1.1). FIPS and Common Criteria certified HSMs can support entropy and DRBG requirements (1.01.3, 1.01.4). As HSMs are built to have tamper-resistant hardware, they also support controls for backups and key material storage.
Using an HSM is an architectural choice the entity makes but is never sufficient on its own. The Standard also requires surrounding governance, documentation, personnel training, monitoring, data sanitization and key compromise procedures. These controls must be in place regardless of the underlying technology.