Personally experiencing a full up-front version of virtual reality with you immersed inside as the star player, is the 'in-thing' in modern digital technology right now. Immersing yourself in 3-D 'what if' scenarios, ideally of your own creation - the early versions of the ultimate in Star Trek holodeck simulations - is the name of the virtual reality game. Of course you already experience virtual reality 24/7/52. Anything and everything you experience is courtesy of your sensory apparatus, your memories, and your overall state of being as a conscious, self-aware being. If all reality is experienced solely within your mind then you already exist in a virtual reality 'world'. That's especially the case when you dream. That could also literally be the case. In that Star Trek virtual reality holodeck, some characters were really real and some characters were virtually real. What if in this (holodeck) world you are actually one of those virtual reality characters? Welcome to the world of virtual reality.
PART ONE: OUR VIRTUAL REALITY
What follows is in a way my own playing a "what if" scenario 'game'.
There is a lifelong virtual reality scenario that plays out inside your skull from the time you develop a reasonable facsimile of a brain until your death. This unfolding virtual reality scenario, call it consciousness if you will, is being constantly upgraded as you continue to receive new sensory data from outside (outside being external to your skull). But the contents of this ever unfolding mental virtual reality scenario (I don't really want to call it a 'game'), your mental path through life from birth to death, do not endlessly increase. Your brain is not a black hole receptacle that can suck in everything that externally comes your way.
At any and every given moment only part of the overall virtual reality scenario your mind finds itself in is front-and-centre. That's pretty much what you are conscious of in the immediate here and now. Other parts are stored away as memory, in your subconscious, out of sight and out of mind until needed. But by far and away most of this virtual reality mental software just dissolves away back into bits and bytes. Over your lifespan you are going to forget 99.999% of what you ever experienced. These bits and bytes will just be reused, recycled, reassembled as required - the raw materials from which the next episode of complex front-and-centre virtual reality conscious experience plays out. Other bits and bytes are lost via heat and other waste products to be replaced by your intake and breaking down of food, air, water, etc. So your brain just isn't an endlessly absorbing sponge or dump of bits and bytes. Translated, over your lifespan, bits and bytes in will pretty much equal bits and bytes out.
The same with our simulation - if simulation there be. There is the highly structured NOW where the bits and bytes are assembled into our perceived virtual reality landscape. All of the assembled bits and bytes that made up NOW, now dissolve back into their fundamental components to be reused, recycled and reassembled for the new, next, upcoming NOW. In other words, all of the software that is now past tense, that has served its purpose and has come and gone, can be reused, recycled and reassembled into the software required that's yet to come - of the future yet to unfold.
If the initial mind analogy isn't sufficient, think of one of our own simulations, be it gaming, training or "what if" research. Only a part of the whole is active at any one time and, in the first two cases at least (gaming and training) under the control of the user (i.e. - the player or trainee). So at any one time, presumably the NOW time, only a small fraction of the gaming, training or "what if" scenario software is operational. That's all the computer need handle from moment to moment. That NOW fraction. As things evolve, new software comes into play and old software retreats into the background in a dormant mode. Thus, you can have a massive amount of software, say enough to simulate the entire visible Universe, but only a small fraction is being played out and processed at any one time - thus you don't need massive computing crunch power to simulate an entire Cosmos since not all of the simulated Cosmos is in-your-face in any NOW moment.
PART TWO: SOME MORE ABOUT OUR VIRTUAL REALITY
Now the only reality that you have ever known is the reality you find yourself in right now. You have never known any other kind of reality even though you know some actual, and some potential other realities exist. You know there has to be some sort of reality inside a Black Hole but exactly what that is, nobody knows, and even though there is speculation that our entire Cosmos is the inside of a Black Hole, you're probably assuming that you aren't inside a Black Hole reality. You know there is virtual reality because we have created computer simulations yet you are not a character in one of our video games. Potentially, there might be the reality of extra dimensions according to string theory. Still, the only reality that you have every known is right here and now.
Since you have never experienced any other reality except the one you currently find yourself in, you have no other reality that you have experienced that you can compare and contrast this reality to. Therefore, this reality might indeed be "an extremely elaborate simulation". You don't know one way or another since you only have one data point to work with.
Now it could well be that say the Cosmos of The Simulators would require say 100,000 computer crunch power units to simulate one-on-one. Alas, The Simulators only have 100 units of computer crunch power on tap and so have simulated a 100 computer crunch power mini-Cosmos. That's us; that's our Universe by the way. No near infinities need be entered into, which reflects the sort of computer crunch power units we have expended. We haven't over-taxed our available systems of computer crunch power.
Now The Simulators, operating their simulation which is our mini-Cosmos (our Universe), could well have a different perception of time relative to what they have simulated. In other words, perhaps one 'minute' of their existence equals one decade of ours. Or, just as we can speed up or slow down a DVD, so to could The Simulators control their simulation. They could speed up or fast-forward through the boring bits and slow-down when things get interesting.
Of course however smart we are is all pre-programmed in a simulation, so we might not be programmed to be smart enough to detect a less than perfect simulation. Which brings me back full circle. Since the only reality we know is this one, how can we compare what is and is not "perfect"? Some things might strike us as anomalous, but we can't compare existences and degrees of perfection, since we're stuck with the one reality we find ourselves in.
PART THREE: YOUR REALITY IS ALL IN YOUR MIND
Even if the Simulation Hypothesis is false, you still 'live' or 'exist' in a virtual reality, thanks to yourself. You 'exist' within a virtual reality because all of your external really real reality is altered by your own brain's internal mental software to fit inside your skull. Since really real reality isn't inside your skull, what you perceive there has to be virtual reality generated by your brain's mental software.
Video games, training simulations, "what if" research scenarios are all 2-D. Depth is an illusion generated by the software.
Now say you climb up to the Observation Deck of the Empire State Building (or equivalent) and take in all of the vast external landscape spread out before you. Now clearly that volume of space you see cannot fit inside your skull, yet that's exactly where it is since 100% of your really real reality is literally now inside your skull but as virtual reality. Everything external to your skull is perceived and filtered to fit comfortably inside your skull. Just like in a simulation, the dimensionality is transformed. Left-right and top-bottom are compressed to fit and depth is again illusionary. Your external world maybe 3-D but your perception is 2-D - just like any other virtual reality simulation.
You don't have enough bits and bytes inside your skull to accommodate all that you see, so short-cut compromises are being made by your brain's mental software in order to fit what you externally see to fit that view that's now inside your skull.
I cannot fit inside your head but if you saw me, that's where I'd be thanks to the photons reflecting off of me and into and through your eye and on to your retina hence converted to electrical impulses which transmit as electrical signals into your brain which reconstructs same back into a virtual reality version of me that now can fit inside your skull.
In reducing the vastness of outside (your skull) to the compactness of inside (your skull), that's showing an economy of scale. There has to be a loss of data in this compactification of a large amount of volume thrust into a tiny volume (your skull). Lots of stuff gets left out. So in fact there might be relatively little similarity between the really real reality out there and the virtual reality inside your head. It's like saving one in every ten letters that's in the text of a book or other document. It's the same with any simulation. There's never a one-on-one correlation.
This concept of virtual reality all in the mind is also nicely illustrated by the fact that you dream. Your dreams are internal to you. They are virtual reality. Your brain's mental software can create highly, very highly realistic dreams and dream scenarios. And as with the case of the translation of a vast external reality shrunk down to fit inside your skull, your dream landscapes are mini versions of what would exist, if they exist at all, 'out there'.
How about memory? Say one hundred days ago you did one thousand things from waking up and getting dressed, to going to the bathroom and making up the bed, to making, eating and doing (washing) the breakfast dishes, from going to the store to buy milk and bread, to watching this and that show, reading this book chapter, going out dancing, posting bits and pieces here - thousands upon thousands of possibilities. Presumably your neural processes didn't discriminate between all of these one thousand activities that you did one hundred days ago. Yet one hundred days on, you might remember say just two out of those one thousand things that you did, yet you made no conscious decisions about what to remember and what to forget. So apparently there is a software program within your neural networks that decides for your conscious self what to forget and thus dumps those nine hundred and ninety-eight activities into the recycling bin and deletes it all. So there's deliberate design that removes any and all unnecessary clutter and deliberate fine-tuning by defining exactly what is and what is not clutter.
Now take the two things you do remember - say one of which was this new catchy tune on the radio. Now you don't have inside your brain any of the standard technological memory retention devices like hard-drives, USB sticks, LPs, CDs & DVDs, pieces of paper, celluloid film, punch-cards, and so on. So what exactly is storing those two activities from one hundred days ago? It probably has to be chemistry of some sort. Since I can't think of any kind of known chemistry (atmospheric, nuclear, cooking, blood, soil, organic, inorganic, bio, etc.) that incorporates memory, how is this new catchy tune stored?
Oh, there is one other memory storage device - software.
So, to conclude, you are, as is everything else you perceive and hence come to terms with, virtual reality thanks to your own software. Now did that software arise naturally or was it implanted by an external means?