The whole simulation theory stems from observations about how fast technology is advancing as a whole, and kind of plays hand in hand with the fermi paradox. Either we are a special advanced civilisation that will continue to advance until we could in theory simulate an entire species/planet/civilisation or whatever or we are doomed to die out before we can advance enough to achieve either that goal or potentially other goals such as building replicating space exploration technology that might be capable of exploring/consuming/adulterating part of the galaxy or even the galaxy as a whole.

Both theories are basically an extrapolation of our current technological progression with some large assumptions made about the way things in this universe operate as a whole. I don't think they are particularly far fetched, but I also don't really see much evidence to support either being a possibility, except maybe the whole we are fucking up our ecosystem and heading towards some type of collapse before we get too advanced parts of the fermi paradox.

Another theory that I've heard which is really just a statistics thing is that it's most likely that we are an average civilisation that lasts an average amount of time in an average part of the galaxy and that it's likely we are right about in the middle of the total number of humans that has or will ever exist (about 100 billion came before us, probably another 100 billion to go) which could be a couple centuries or millenia left of human reign over planet Earth.

All being said, it's pretty likely that since the future hasn't happened yet we just won't know how it all turns out until it does. We're all just as uncertain as anybody else, and whoever preaches the gospel of kingdom come is just as ignorant as you and I.