Is it feasible? What Dyson sphere level of power would be needed to maintain such a simulation? Is that level of energy available to whomever is running the simulation?
Is there a positive ROI? What does this advanced civilization get out of running such an expensive simulation?
Is it moral? The simulation involves sentient creatures who are capable of deeply contemplating their own existence, capable of feeling rapturous pleasure and indescribable pain and loss, and ostensibly capable of making moral choices that range from heroic to depraved. Doesn't there come a point where the beings in a simulation are so close to the beings in "base reality" that the same moral principles apply? If you press a button that kicks off a simulation where humans can torture and murder each other, behaving essentially identically to humans in "base reality," aren't you in some sense facilitating those deaths?