It's a lavishly paranoid idea, but not without a perverse philosophical appeal.  Achieving mainstream popularity in 1998 when "The Matrix" hit theaters, the concept isn't as new as it might seem.  Science fiction author Philip K. Dick pioneered the sort of solipsistic dream-or-reality fiction that would later find renewed urgency in the cyberpunk novels of the 1980s.  The idea's staying power is arguably due to the fact that there doesn't seem to be a convincing technical reason why our world (if not the Cosmos itself) couldn't be an incredibly rich software program operating according to set parameters (which we might interpret as physical laws and constants such as Einsteinian relativity and the counterintuitive domain of quantum uncertainty).

Novelists and philosophers alike have devised myriad reasons why an advanced intelligence might create a simulated world.  Arbitrarily capable scientists might want to tinker with physics, recreating the "real" world while incorporating experimental content: an endeavor to which our own scientific community aspires, often aided by advanced computational models.  Or maybe we're an anthropological experiment set loose in an agar of code; somewhere, overseers could be watching our plight with keen interest.

Metaphysicians typically refute the idea that consciousness can be reproduced through purely mechanical means, in which case the argument for our existing within a simulation (with or without simulated aliens) can be summarily forgotten.  But if self-awareness is indeed epiphenomenal--the inevitable outcome of physical processes within the brain--then the possibilities become effectively endless.  For example, we may not only be a simulation, but a simulation within a simulation.  Or, more demeaning yet, a simulation within a simulation within a simulation.

If so, the question of whether or not we're alone in the Cosmos is faced with some unexpected variables, none so vexing as our potential inability to determine whether there really is an "out there" or if we're merely staring at the bars of a cosmic jail cell.

Mac Tonnies