I'm baffled at the idea that the simulation hypothesis is silly. It can be rephrased "We are not at the top level of reality." Given that we know of lower levels of reality (works of fiction, artificial life programs, dreams) it seems unlikely we're at the top.

Do you have any evidence that any of those levels have anything remotely approximating observers? (I'll add the tiny data point that I've had dreams where characters have explicitly claimed to be aware. In one dream I and everyone around was aware that it was a dream and that it was my dream. They wanted me to not go on a mission to defeat a villain since if I died I'd wake up and their world would cease to exist. I'm willing to put very high confidence on the hypothesis that no observers actually existed.)

I agree that the simulationist hypothesis is not silly but this is primarily due to the apparently high probability that we will at some point be able to simulate intelligence beings with great accuracy.