Mathematicians have long lived in a useful non-physical reality. So have many artists and writers.
Certainly improving physical reality remains valuable, but the non-physical world will likely grow in real as well as ephemeral value at a higher rate.
From a purely functional angle, the physical world does not include many affordances that the digital world provides for our minds, ability to communicate, learn, discover, etc. Virtual worlds will adapt to our minds, being the ultimate mental tools. And our minds will co-adapt.
Where that goes, nobody knows. But along with AI its likely to be the story of this century.