I think the distinction is a little semantic; the idea is that a simulation is anything that can be computed by Turing machine. So regardless of if we’re in a T

I think the distinction is a little semantic; the idea is that a simulation is anything that can be computed by Turing machine. So regardless of if we’re in a TM that’s being fed weird undecidable statements, the fact that they exist at all means at some level reality can’t be a TM. Contrast that with having undecidable processes that might go on forever, we could be in a TM and still have those. Basically simulation here means “is a TM”, not “is nested”.