I think you know the simulation hypothesis. Our universe could be a simulation created by… well, let’s call them “gods”.
But, if the simulation continue, we, humans, may reach the point where we could create a simulation of our own universe. In which, the simulated people would reach the point where they simulate their universe, etc…
So, as a corollary, it is not possible to simulate the entire universe, because this imply simulating an infinity of entire universe. It is only possible to simulate a simpler, smaller universe at each “layer”.
So my question, are we at the top of the stack, or at the bottom ? Which would imply a much bigger and much more complexe universe above us.
I disagree with your corollary. We don’t know the rules of the universe that our simulated universe resides in. We could be the first layer or an infinitely lower layer, and there would be no way of knowing.