I think you're taking it way too literally. The author is proposing a model that [allegedly] does a good job of explaining why we see unexpected behavior, not a description of what they think is happening. I think charitable reading would require you to mentally insert a lot of qualifiers, e.g. "When we give the LLM a prompt, it [behaves like something that] simulates every possible entity consistent with the prompt." That's certainly how I read it, anyway.

edit to add: this is similar to how people discussing evolutionary biology will often use "evolution wants to..." as shorthand for something like "evolution, which obviously cannot want things due to being a process and not an entity, nevertheless can be accurately modeled as an entity that wants to...". Someone will invariably come along in the comments and say, "Nonsense, how can evolution 'want' anything? You must have failed Bio 101!"