>The idea is a sufficiently advanced AI could simulate.. everything
This is a demonstrably false assumption. Foundational results in chaos theory show that many processes require exponentially more compute to simulate for a linearly longer time period. For such processes, even if every atom in the observable universe was turned into a computer, they could only be simulated for a few seconds or minutes more, due to the nature of exponential growth. This is an incontrovertible mathematical law of the universe, the same way that it's fundamentally impossible to sort an arbitrary array in O(1) time.
This is a demonstrably false assumption. Foundational results in chaos theory show that many processes require exponentially more compute to simulate for a linearly longer time period. For such processes, even if every atom in the observable universe was turned into a computer, they could only be simulated for a few seconds or minutes more, due to the nature of exponential growth. This is an incontrovertible mathematical law of the universe, the same way that it's fundamentally impossible to sort an arbitrary array in O(1) time.