It used to be that when people contemplated "big ideas," they asked things like "What is justice?" or "How should people live together in a political community?" But today, apparently "big ideas" means contemplating complete nonsense, like "Are we living in a simulation?"
A simulation is an abstraction. Of course, there is something really going on: it is electricity moving around some circuits. But think about the proposal from that perspective: maybe we are really just living inside some electricity moving around circuits. How could someone "live inside" an electric current?
The rest of the simulation is nothing more than our own interpretation of what that electric current represents. There is no thunderstorm in a weather simulation; we choose to interpret the current's movements as representing a thunderstorm. If we wish, we could instead choose to interpret it as a piece of music, or directions for firing pieces of artillery, or for making stock trades. If someone were "living in a simulation" of a thunderstorm, and the creators suddenly decided to interpret it as a piece of music instead, would the clouds above the "simulated person" suddenly turn into musical notes?
The whole idea is a complete piece of intellectual rubbish, which simply can't be thought through coherently. No, we are not "living in a simulation" because a simulation is an abstraction, and nothing whatsoever lives in an abstraction. The question is like asking if we are "living in a trigonometric function" or "living in an Edgeworth Box model."