This is a good answer, because it prevents the dehumanization trap that these theories fall into:
Basically, the belief that some beings don’t have “souls”, and don’t have to be treated with conscience.
The “we are in a simulation” conspiracy fans toy with an idea of NPC that is horrifying: That some humans are just acting like humans very convincingly, but they are just thin shells that don’t really really feel pain or happiness. Whatever you do to them can’t be morally wrong.
It is also similar to how some religions have ideas that people can have their soul taken by Satan and are just demonic possession vessels here to corrupt us. They behave very much like humans but do not be tricked!
Europeans used to think Africans had no souls, they were just animals that were very good at imitating human behavior.
These thoughts are all extremely strong tools for any fascist movement needing some vague excuse to commit atrocities to their opponents and scapegoats.