It's somehow poetic that many of the arguments Musk puts forward are similar to those of religious people.
I did have a chuckle at how he explained the theory as a convenient way for scientists / atheists to believe in life after death. As though this fear is what might drive people to believe in the world being a simulation.. which is 'poetic' because some religious people believe in god because it's 'safer' than risking going to hell.
I think Jared's comment above is pretty accurate. This world is an illusion, just not in a physical-technical way.
But.. who knows. I'd be comfortable with this world being a simulation. I would put in a complaint about my life events in 'the game'... and I would then worry that I might technically be an NPC rather than an actual living participant
Then we'd have to ask if it's a pay-to-win simulation.. did some people pay more to be born into richer families..?