Depends how you define simulation. There's no reason to assume that you need, or even that it's desirable, to simulate more than "almost nothing" in order to simulate what you'd want to simulate - even a whole universe can be simulated with ease if your required fidelity is low enough.

So, if you want to simulate every possible interaction in realtime, sure. But you can increase overall capabilities by making sacrifices along several axes: duration, speed, precision, persistence of changes from a generative baseline and lots more.

In other words it depends entirely of your purpose for simulation.