While I remain agnostic of Elon's argument I would like to know what is the matter with this absolutism of vision. Who ever said that the entirety of our 'reality' has to be simulated? That's just BS.
You have to think in human terms, our extremely limited senses can be easily simulated, ever wondered why we have almost no conscious perception or control over our 'inner' biological functions? Simple: code optimization. Do the planets/outer space really need to 'exist' while you have breakfast ? Not really. There are just a handful of items that need to 'read' the universe... namely telescopes and such, and most of them are just displaying visible light 'images' of what's outside.
So easy to cheat... Do atoms really need to be simulated during your daily activities? Looking at what we can do with CGI and so forth times 10k years, not really. And the list could go on forever. I find disturbing this 'modern' trend of black or white vision. It's either all or bust.... Hollywood films too much?