Yes, we could be in a simulation. In fact, maybe none of you exist. I might have been created 5 minutes ago complete with false memories in a virtual world where I am the only conscious entity. The folks running the simulation would also be conscious entities. I might be one of their experiments.
The operative words in the above paragraph are 'could', 'maybe' and 'might'. In fact most the time I don't think about it; I just assume that other people exist and my memories and sensory input have a rough correlation to some sort of reality because that seems like the practical thing to do. But I acknowledge that I can't know for sure that that's the case. So, the rest of this post, I'm going to assume that you other people exist and this is not just for the amusement and edification of some AI students observing me in yet another run of their simulation software.
Back in the 1600s, philosopher Rene Descartes considered the matter and decided that the only thing he could know for sure was that he existed, because he was thinking about it. Everything else might have been false. (His famous line, in Latin, was Cogito ergo sum, I think therefore I am.) Older than DesCartes is the idea that life is a dream, or we are living in the dream of some god, who is himself living in the dream of a god, etc.
Presumably, we (or at least I) might be in a simulation nested in another simulation. But working up through the levels, one would expect to get to the original. The creators of that first simulation don't have to be gods. They might have evolved up from a primeval universe formed in a big bang. They wouldn't necessarily know the answers to the really fundamental questions like how did it all get started? Why is there something instead of nothing?
I don't know the answers to the fundamental questions and I don't think anyone else knows. (If I thought somebody else knew, I'd ask them, and then I'd know, right?) This is what being an agnostic (from ancient Greek for not knowing) is all about.