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Jordan comments on A Much Better Life? - Less Wrong
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My tentative response to these questions is that if resources from a reality X can be used to simulate a better reality Y, then this might be the best use of X.
Suppose there are constraints within X (such as unidirectional flow of causality) making it impossible to make X "perfect" (for example, it might be seen that past evil will always blight the entirety of X no matter how much we might strive to optimize the future of X). Then we might interpret our purpose as creating an ideal Y within X.
Or, to put my argument differently: It is true that Y is spatially restricted compared to X, in that it is a physical subset of X, but any real ideal reality we create in X will at least be temporally restricted, and probably spatially restricted too. Why prefer optimizing X rather than Y?
Of course, if we have the universe at our disposal there's no reasons the better world we build shouldn't be digital. But that would be a digital world that, presumably, you would have influence in building.
With Psychohistorian's hypothetical, I think the main point is that the optimization is being done by some other agent.