In relation to any 'reality' there are always two apparent contexts. A few examples are that one cannot have a story without a book being read, or a movie without a movie reel in a projector, or a virtual reality without a computational process. In each of these examples the first is an empirical context (objects, places and events) and the second is a transcendent context (that which creates and sustains the empirical context).
There is also a unified context, which is the context that contains both apparent contexts. For example, a room containing both a book and a reader with an imagination is the context in which the reading of the book operates (transcendent) and the imaginative experience of the story manifests (empirical). These are all just simple worldly examples to illustrate some aspects of the situation. In the case of our own reality and world-experience things are more subtle but still manifesting an apparent empirical and transcendent as well as a unified context. The two apparent contexts are just different perspectives on the one unified context, hence they are not actually separate contexts, but only appear to be separate.
Although there is one unified context and two apparent contexts, when contemplating the nature of our reality most people are unaware of the unified context and fixate on only one of the apparent contexts and assume that it is the only context. Some are grounded in one apparent context and deny the other, thereby only understanding half of the situation, and some attempt to mix both apparent contexts into one and thereby get very confused.
Below is a simplified map of the contexts and a brief commentary using the VR analogy.
Many empirical scientists and believers in materialism can be located in the lower left quadrant. They are like characters in a virtual reality believing that the virtual world is the totality of reality. They can only understand half of the situation and thereby cannot properly understand any of it. They are looking at the unified context solely from an empirical perspective.
Many spiritualists can be located in the upper right quadrant. They are like characters in a virtual reality believing that the computational process is the totality of reality. They can only understand half of the situation and thereby cannot properly understand any of it. They are looking at the unified context solely from a transcendent perspective.
Many spiritual seekers can be located in the upper left quadrant. They are like characters in a virtual reality believing that the virtual world is the totality of reality but still trying to understand the computational process in terms of concepts that only have meaning within the virtual world. They become very confused because of the mixed contexts.
Many spiritual teachers and writers can be located in the lower right quadrant. They are like characters in a virtual reality believing that the computational process is the totality of reality but still trying to understand the virtual world in terms of concepts that only have meaning within the computational process. They become very confused because of the mixed contexts.
Those spiritualists that are advanced in self-realisation can be located in the unified context. They are like characters in a virtual reality believing that both the computational process and the virtual world are parts of the one reality. They can understand both contexts and thereby properly understand the entire situation. They are looking at the unified context from both a transcendent and an empirical perspective.
From these comments we see that the VR paradigm can comprehend both the computational process and the virtual world and can therefore give us a handle on the unified context. The virtual world cannot exist without the computational process and the computational process has no meaning without the virtual world. Both are parts of a single simulation process and cannot be properly understood in isolation. Hence 'simulation' is the unified context in terms of the VR analogy, because it requires both a computational process and a virtual world.
The SMN / VR paradigm is not the only way to understand the unified context but it is the only way that I personally know of to describe it and communicate it. There are many spiritualists who have attained a profound understanding of the unified context but it is difficult to describe what this understanding is because our language is mostly bound to the empirical context and is partially adapted to the transcendent context, but not to the unified context.
An example of the unified context being hinted at is in the lamrim, a core teaching of the Gelug lineage of Tibetan Buddhism. Below is quoted some passages regarding the correct understanding of 'emptiness' (sunyata), from “The Three Fundamentals of the Path” by Tsongkhapa.
The appearance that things are mutually interdependent
Is no illusion; but there are those
Who understand emptiness to be something
Devoid of this appearance.
As long as these two
Seem separate to you, you will never
Realize the thoughts of the Great One.
The mere perception (that these two)
Go together – that they are not alternatives,
And that mutual interdependence is undeceptive –
Will destroy all the ways in which you grasp at objects
With the mind. At this point you perfect
Your analysis of the view.
You eliminate the extreme of specious substantialism;
You eliminate the extreme of empty nihilism.
If you understand how emptiness presents itself as causes and effects,
Views that grasp extremes will not impress you.
What is described here as substantialism is the bottom left quadrant and what is describe here as nihilism is the upper right quadrant. To understand the unified context we must realise that these two “Go together – that they are not alternatives” but are in fact two different perspectives on the one unified context.
Also in the Bhagavad Gita (chpt 13) it is said:
“This very body... is called the ksetra [field, empirical context], and he who knows it is called the ksetrajna [the knower of the field, transcendent context]... Know that I am the ksetrajna in all ksetras... I hold that, knowledge of the field and of its knower is true knowledge.”