Most people I know who take the simulated universe argument seriously, do so as part of a religious ideology. It's an untestable hypothesis. Also, if the universe was simulated, it would most likely be much simpler than the physical universe we are discovering with science. It could also be designed in a way to prevent us from ever discovering how it works, or for us to easily do. If it was created by someone who had the intention of promoting belief in their existence, that existence would be obvious, we wouldn't have all those human religious traditions. Unless it was a purely experimental fully scientific simulation of a universe from a more advanced scientific community, really wanting it to run like a real universe.
But then, they would likely have a hard time to properly observe or manipulate it as well. It would also assume that the kind of energy used in our universe is very different to theirs, because running the simulation would require incredible resources, it would also likely run at an extremely slow pace for them, so that only in-simulation agents would experience time the way we do. If the host universe is similar to ours, even alien AI designed to run such a simulation for millions of years would mean eating up the energy of their universe to simulate ours.
Also, since these ideas are often used to justify idealism, pseudoscientific creationism, or miracles, it's still a problem, because we don't see any evidence of an active divine force or of its interventions in the universe. One could consider all physical energy and the universe as being an impersonal divine force itself, like in pantheism, but that too is human fantasy, just like animism was, seeing the divine in many things people didn't understand better. A god of the gaps will always infiltrate itself somewhere.
Then about other universes, they're hypothetical and it would make sense, since ours exists and may have had a beginning, we can at least trace an important development that produced time, space and matter as we know it, the big bang. A main hypothesis is that many universes are produced or exist and that some of them allow the conditions for life to develop. I'm not saying that it'll never be possible but so far it appears that since physics can only observe our own universe, it's rather unlikely that we ever eventually be able to have any access to actual information about another universe.
And a final note about denial: there's nothing to deny when there's just no evidence for it. There is much to deny if we prefer to discard knowledge discovered through science and entertain some fantasies or myths instead.
The same applies when it's used to justify arguments about aliens, interdimensional (the continuation of the belief in spirits) or not. It's one thing for the universe to be old and large enough for life to be plausible at multiple space/time in it, it's another story for two intelligent civilizations to ever be able to meet in such a huge universe (anthropic principle).
