Alternate theory. In its core, the universe is a giant one-dimensional loop, which starts "curling" to form multidimensional forms as energy lowers and it's insufficient to keep the string straight (think about small magnets forming a line, but if not strong enough you can form looped shapes with them).
The universe has potentially infinite dimensions defined as n-dimensional Lorenz space: a space where every next dimension is perpendicular to all previous dimensions. The number of spatial dimensions depends on the overall energy level of the Universe, as well as local energy topology.
Black holes represent these inflectional shifts of spatial dimensionality. The surface of a black hole encodes a closed (no beginning, no end) space of a 2D universe, and inside that 2D universe, high-energy regions form two-dimensional black holes, circles, on the surface of the 3D blackhole. The surface (circumference) of those circles is just the original 1D string unentangled, and this is where the set of nested black holes end.
Our own universe is the surface of a 4D blackhole.
We mathematically determine black hole is just a point through which structure doesn't survive, and truly there's nothing at the center of a black hole (i.e. the black hole itself as we define it), but hovering just above the Schwarzschild radius is a whole another set of nested universes, nested in one another, and each of those nested universe is rich with emergent structures, just like in ours 3D+time universe.
We simply can't access it, because the building blocks are of a different category. Basically the building blocks for our particles are made up of what is the particles in a 2D universe (refer to string theory and how vibrating 1D strings in N dimensions form our perception of particles).
So maybe black holes aren't just "we give up, nothing happens" here. Maybe they're rather "we give up, let's unravel one spatial dimension here in order to find new energy-stable configuration".
This actually doesn't contradict your simulation theory, but it adds some unexpected twists to it. Because what looks like just spacetime eating holes may in fact be brimming with life, and maybe our entire universe is one, as well.