I agree. Technology will soon (within 1000 years) take us to a place where whatever we can imagine we can have in a simulation that is indistinguishable from the real world. Why bother with the real world anymore?

There maybe some cultures that still see value in the physical world, but I'd wager not many.

I also think it's likely that panspermia is a thing. Life is evolving at the galaxy level, it's therefore a little more reasonable to think that we represent one of the more evolutionarily advanced life forms at the current time.

People who see no value in the physical world don't want simulation to be indistinguishable from the real world.

Yeah, I actually think there's a ton of merit to this. Fundamentally, the natural progression of technology for any alien species is probably going to be the capability to backup/restore/copy/enhance their consciousness. Biology is delicate, but a purpose-built computer can be designed to survive under very austere conditions, and offers so many incentives! Under the premise that such technology allows for faster and more robust iteration, it would quickly come to dominate the species within which it originates. At that point though, I think there's a lot of incentive toward looking inward rather than outward as an entity--be it from internal competition to become the dominant intelligent entity within your species, or because you've secured a large store of energy and low entropy to harvest. At some point, your iterations are so fast that, IMO, expanding beyond a certain size is likely to introduce a significant fracturing of that society/entity. Why spend the energy on having to compete with your future self?