The word simulation seems to imply that we are simulating something else.

Well, we actually have simulations all around us, if we could we would simulate our very own civilization, and if a more advanced species have the same likes, perhaps they could simulate a universe as complex as the one we are seeing.

But I also think we should invest fully in our experience of life and pay full attention

Agree, whether we are on a simulation or not, we should make everything to make the best possible life.