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Desrtopa comments on Theists are wrong; is theism? - Less Wrong
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The first part of your belief that "it is implausible that we are in a universe simulation" appears to be based on the argument:
If simulationism, then solipsism is likely.
Solipsism is unlikely, so . . .
Chain of logic aside, simulationism does not imply solipsism. Simulating N localized space-time patterns in one large simulation can be significantly cheaper than simulating N individual human simulations. So some simulated individuals may exist in small solipsist sims, but the great majority of conscious sims will find themselves in larger shared simulations.
Presumably a posthuman intelligence on earth would be interested in earth as a whole system, and would simulate this entire system. Simulating full human-mind equivalents is something of a sweet spot in the space of approximations.
There is a massive sweet spot, an extremely effecient method, of simulating a modern computer - which is to simulate it at the level of it's turing equivalent circuit. Simulating it at a level below this - say at the molecular level, is just a massive waste of resources, while any simulation above this loses accuracy completely.
It is postulated that a similar simulation scale separation exists for human minds, which naturally relates to uploads and AI.
To uploads, yes, but a faithful simulation of the universe, or even a small portion of it. would have to track a lot more variables than the processes of the human minds within it.
Optimal approximate simulation algorithms are all linear with respect to total observer sensory input. This relates to the philosophical issue of observer dependence in QM and whether or not the proverbial unobserved falling tree actually exists.
So the cost of simulating a matrix with N observers is not expected to be dramatically more than simulating the N observer minds alone - C*N. The phenomena of dreams is something of a practical proof.
Variables that aren't being observed still have to be tracked, since they affect the things that are being observed.
Dreams are not a very good proof of concept given that they are not coherent simulations of any sort of reality, and can be recognized as artificial not only after the fact, but during with a bit of introspection and training.
In dreams, large amounts of data can be omitted or spontaneously introduced without the dreamer noticing anything is wrong unless they're lucid. In reality, everything we observe can be examined for signs of its interactions with things that we haven't observed, and that data adds up to pictures that are coherent and consistent with each other.