But the simulation doesn't have to be perfect. It doesn't have to be complete. Maybe only you and your friends are actually being simulated, and everything else is just a partial stub. Maybe only the relevant parts are rendered.
I actually read Nick Bostrum's original paper and it's a pretty interesting read. Basically it looks at the long tail end of things. When you predict things waaay into the future, you tend to gain accuracy for macro predictions.
For example: our sun will most likely run out of energy and die out one day. The plate border in East Africa will most likely break apart at some point causing that continent to split.
The big one: humanity will one day go extinct. ... or...we'll expand to Mars and other parts of the solar system and thrive for millions of years. There are other options of course (we get blown back to the stone age, some humans survive and technology has to restart from a few thousand years ago...repeatedly...until we either leave this planet or go extinct).
If our machine understanding continues to grow, we should be able to eventually make machines that can simulate parts of the world we're in. So either we've already done that (some other we), and we (you and I we) are the products of their simulation ... or we'll go extinct one day.
...or simulating this world, perfectly or imperfectly, isn't possibly at all. ... and we'll go extinct one day.