You know, whenever this theory is discussed, everybody seems to assume that this simulation that we're allegedly living in is supposed to be an approximation of the parent universe, similar rules, but probably lower fidelity (basically the sims).

I think we should forget that assumption. It's human centric. Who's to say that the entity running the simulation even meant for it to be a simulation at all? Given our universe appears so much bigger than our pale blue dot from the inside, if our universe is a program running in a parent universe, I doubt that we - homo sapiens - are the point of it, or it'd be leaner, more focused. We'd be the center of the universe. But at every step of scientific discovery, we've found that that isn't true. We're just noise, sand on the beach, dust in the wind. If we live in a program, I doubt that the person running it is even aware of us specifically as a species, let alone as individuals. I doubt that they're specifically aware of any particularly galaxy, in the same way a neural network developer isn't aware of any specific weight in their model.

Granted, you could argue that that the rest observable universe is an illusion, a wilderness mural painted on the walls, designed by the simulation operator to make us think that we weren't in a zoo. But that sounds a lot like "God put those dinosaur bones there to trick us", so personally, I doubt that's it.