*If you do not see why this is true, consider that there can be multiple hypothesis which would output the same state in their resulting universes. An obvious example would be one which specifies our laws of physics and another which specifies the position of every atom without compression in the form of physical law.

This is exactly the sort of thing for which Kolmogorov complexity exists: to specify the length of the shortest hypothesis which outputs the correct result.

Just as atomic theory isn't penalized for having lots of distinct objects

Atomic theory isn't "penalized" because it has lots of distinct but repeated objects. It actually has very few things that don't repeat. Atomic theory, after all, deals with masses of atoms.