I just watched Inception. I LOVED it. It's genius. It's probably too abstract and bizarre for some people, but I'm a sucker for "meta" stuff. I also loved the plot, acting, and of course the score.
Inception is (SPOILERS) about professional thieves who steal information from victim's minds while they dream. They are hired to perform "Inception" the (widely believed to be impossible) act of implanting an idea in someone's subconscious. To do this, and make it seem to the subject that the idea came from them, they must put the subject in a dream—within the dream. Which is itself within another dream.
We humans seem to like to wonder if our own world, itself, is an illusion—we call this Simulation Theory. However, Simulation Theory is not a scientific theory, but at best a hypothesis, and at worst pure metaphysics.
The Matrix inspired a lot of people to question the reality—of reality. Are we in a simulation? How would we know?
Here's the problem: There's this thing in science called the principle of parsimony (better known as Occam's Razor). Occam's Razor is frequently misunderstood, and so I recommend checking out Mike Wong's essay on the subject.*
Occam's Razor states, "entities should not be multiplied beyond necessity". By this, it is meant that, in the absence of enough evidence to make a judgement, we should prefer models or explanations which are evaluatable (falsifiable—we can find out if they're wrong) and which rely on as few terms as possible.
For instance, in the case of UFOs, that weird-looking dot in the sky could be an alien craft. But it could also be something we already know about, such as a weather balloon. Since we don't have enough data to conclusively rule either one out, and "it's aliens" is a non-quantifiable explanation (since we know nothing about these aliens, and can't currently disprove their existence) the idea that it's an alien craft is sliced away by Occam's Razor.
The same principle can be applied to "Simulation Theory". Yes, we could be in a simulation. But we have no way of finding out, and we know nothing about the qualities of universe-size simulations, so it's a non-quantifiable explanation. In short, it's absolutely possible, but thinking about it isn't particularly useful.
Inception is an ingenious movie, and echos some pretty cool philosophical questions. But the idea that our reality is illusionary is simply not testable right now.
I guess that makes me Cobb.
*Wong, "Occam's Razor", 2003. stardestroyer.net/Empire/Essays/Occam.html (I disagree with Wong's argument against the existence of God in this essay.)