We may find out that we live inside a simulation if we can notice that our reality is not realistic, at least in some aspects. To see why we can look at the possible motives for post-humans to run simulations of human civilisations. Even though it is not certain post-humans might have similar motivations as we have. Modern humans attach great value to their inner selves, so we may not change our human essence once we can. Hence, the motives of post-humans might well be similar to ours, and they might run simulations of human civilisations for research or entertainment.
Research could be about running what-if scenarios. So what if a giant meteor hits the surface of the planet? What if China never became unified? Alternatively, what if there never were religions such as Christianity and Islam? Or what if a deadly infectious disease breaks out? Countless scenarios are possible. Post-humans might be interested in running them to see how humanity will cope. These simulations are likely to be realistic.
Possible entertainment applications are games or dream worlds to make your imagination come true. Such a simulation may not be realistic in some aspects as it reflects the rules of a game or someone’s imagination. Chaos theory states that small changes in the initial conditions of complex systems can have a dramatic impact on future developments. For instance, a butterfly flapping its wings in Texas might cause a hurricane in China. And simulations of civilisations are complex, so to guarantee a particular outcome, you need control over everything that happens. This requirement does not apply to games. Unpredictable developments make games more interesting.
Our understanding of human nature suggests that the number of simulations for entertainment likely vastly outstrip those run for research, at least if sufficient resources are available. Hence, if we do live inside a simulation, we should expect it to be for entertainment. The owner or owners may use avatars and appear like ordinary human beings to us. If reality is unrealistic in some aspects, this suggests that our purpose is entertainment as a simulation run for research is more likely to be realistic. Furthermore, evidence of control further indicates that the purpose of this simulation is not a game but implementing someone’s imagination.
If the beings inside the simulation were sentient, that can raise ethical questions like whether or not they have rights the creators should respect. Considering how humans treat each other, it is not a given that these rights would be respected even when the creators acknowledge them. In a realistic simulation, bad things do happen to people all the time. And in the case of control, the beings inside the simulation are not sentient. They do not think and do not have a will of their own. Hence, we might have no intrinsic value to our creators.