He's arguing against the version of SA where instead of SH being one of the options, "most people with experiences like ours are in simulations" is one of them. The section about rejecting "Good Evidence" deals with the version of SA where SH Is an option. He rejects it because the analog of the intuition pump used to justify the kind of anthropic reasoning used in the first version of SA isn't intuitive to him, but I think it's right.