As I understand it, one of the following three statements must be true:
1. Civilizations go extinct before they are able to create advanced simulations.
2. Advanced civilizations are not interested in creating advanced simulations.
3. There are so many advanced simulations that is is far more likely that we are inside a simulation than in the physical universe.
I might be oversimplifying things here, but I think that's the gist of it.
If we are in a simulation (and I don't think we are) it is upsetting to imagine a cruel operator who could flip a switch and send all of the people in the simulation into agony for all eternity (using Freeman Dyson's Eternal Intelligence idea for extracting infinite computation during the heat death of the universe).