The Simulation Hypothesis proposes that conscious beings could be immersed within an artificial Universe embedded within a higher order of reality. The roots of this argument can be found throughout the history of philosophy in such works as Plato's "Allegory of the Cave" and Descartes "evil demon".
The important distinction between these and modern has been the addition of proposed methods of engineering Simulated Reality through the use of computers. The modern makes the case that since a civilization will be able to simulate many more ancient civilizations than there were ancient civilizations, it is more likely that we are in a simulated universe than not. It shows that the belief that there is a significant chance that we will one day become posthumans who run ancestor simulations is false, unless we are currently living in a simulation.
John Barrow has suggested that if we are living in a computer simulation we may observe "glitches" in our programmed environment due to the level of detail being compromised to save computing power. Alternatively, the Simulators may not have a full understanding of the Laws of Nature which would mean over time the simulated environment would drift away from its stable state. These "glitches" could be identified by scientists scrutinizing nature using unusual methods of observation. However, argues that it is extremely likely that a civilization will have computational powers far surpassing the ones needed to simulate an ancient civilization in great detail. Moreover, one can argue that due to exponential grow, it's extremely unlikely that the simulators are in the region of progress where they already can simulate an artificial reality but can't simulate it with finer detail. They either can't simulate at all, or have computational powers that far exceed the needed amount.