As an analogy, imagine two bacteria. One of them represents a "sim" and one of them represents "reality". Every time a quantum branching - a effectively-irrevocable "collapsed wave function" - affects each, they reproduce, splitting into two or more Everett branches. (Also, every time one of the realities ends up containing a non-identical sim, you also have a new sim; but this is a trivial correction). My argument is that the "branching factor" or "rate of reproduction" of reality will be so massively bigger for reality than for any possible sim embedded in reality that it would be non-trivial to even calculate or express the numbers involved.
I am not arguing that there is not some possible hyper-reality where simulations may be more powerful. Although I think that there may be reasons to believe that the measure of that hyper-reality is negligible, that is a separate argument.
I've written a prior post about how I think that the Everett branching factor of reality dominates that of any plausible simulation, whether the latter is run on a Von Neumann machine, on a quantum machine, or on some hybrid; and thus the probability and utility weight that should be assigned to simulations in general is negligible. I also argued that the fact that we live in an apparently quantum-branching world could be construed as weak anthropic evidence for this idea. My prior post was down-modded into oblivion for reasons that are not relevant here (style, etc.) If I were to replace this text you're reading with a version of that idea which was more fully-argued, but still stylistically-neutral (unlike my prior post), would people be interested?