I realize simulation theory would make an interesting dorm room bull session, but wouldn't the more scientific approach be to ask what evolutionary, biological function our cognitive experience might have and how would those purposes create biases in our understanding of reality? Especially since our social structures seem in need of deep repair.
For instance, as mobile organisms, it would seem logical that we have this sequential process of perception, in order to navigate. Yet it doesn't seem to directly control our immediate reactions and motor functions. In fact, this conscious state seems mostly concerned with reliving prior situations and imagining future and alternative possibilities, while the actual dealing with current situations is left to habit and instinct.
Which implies consciousness does serve as more of an executive function, in processing the enormous amounts of information too which we are subject, so that our future responses are better informed.
Yet what effects does all this recursive thinking cause, as we are often distracted from the physical present?
It would seem the main difference between the awake state and dreaming is that we have to constantly reset to new information and those daydream imaginations are quickly dispersed. While in the dream state, these mental feedback loops just wander around our stored imagination and build on themselves.
Which is what we tend to do, as we get ever better at controlling our environment and avoid having to reset to external influences and be immediately aware. Instead preferring to feed back into our own emotions and impulses. Which seems, when we see it in others, as delusional, but when we do it ourselves, as comforting.
Another significant observation I would point out is that due to thise sequential process of perception, we assume time to be the point of the present, moving past to future, which even physics codifies as measures of duration and treats as a dimension, while the obvious reality is that change turns future to past.
Tomorrow becomes yesterday, because the earth turns. Duration is the present, as the events form and dissolve.
There can be no literal dimension of time, because the past is consumed by the present, to inform and drive it. Causality and conservation of energy. Cause becomes effect.
Energy is "conserved," because it is the present, not some dimensionless point between past and future.
Time is an effect of this energy, like temperature, pressure, color, sound. Time is frequency, events are amplitude.
As process, energy goes past to future, while the patterns generated go future to past. Energy drives the wave, while the fluctuations rise and fall.
Given that consciousness also goes past to future, while perceptions, emotions and thoughts go future to past, it might be useful to consider consciousness as a form of energy.
Though it's the digestive, respiratory and circulatory systems processing the energies, while the central nervous system only sorts the patterns and forms.
I could go on, but this makes my basic point, that we need to consider the reasons for the conscious state, rather than this implicit theistic speculation, as to whether there is some higher conscious thought process setting this one up as some sort of experiment, or entertainment.
Though my experience is that most people are too caught up in their own mental models to look at them objectively.