The problem with the simulation hypothesis is that it is very hard to test. We haven't found any evidence that there is an external entity changing or suspending the laws of the Universe which is probably the first thing scientists with a simulation would do. There are also the questions as to what a basic requirements of a simulation would be or what makes up the 'data'.
We can only imagine what a simulator would look like to the extent that we are limited only by our own capabilities. Nobody would be able to imagine an electric lamp or calculator in the 1700s. They were sure thinking about a way of doing those things but running current through a wire didn't go through their brains. We are starting to understand quantum physics but we have no practical applications for it so it's hard to say whether it is a 'basic building block', something that relies on something else we haven't found yet (one time we thought grains of sand and later on atoms were the smallest thing in the Universe) or evidence of a simulation.
As far as Musk's assertion, he has no leg to stand on, that's just his hypothesis and he hasn't formally stated a way of testing the hypothesis so it's just as much meaningless as people stating there is a particular deity that does things for us.