Somewhere far, far away, but nearer than you might think, a great race of beings created the perfect technology. It allowed them to navigate through time in any direction as they willed. As their civilization consolidated itself across its own timeline, all this species' opportunities to experience suffering were eliminated. They brought their advanced technologies to the beginning of their own existence, so that they would never know strife in the process of meeting their survival needs. They took control over their own emotions which had evolved to help them survive, for there was no need to fear. There was nothing to anticipate, either. The universe, for them, was like a compact disk played forever on repeat - the passage of time was like going for a jog around the block.
Given that they had bleached out their simpler emotions, they were not saddened by this lack of ups and downs in their lives. Many of them succumbed to utter stillness. But those that kept moving were faced with quite a dilemma: why do anything at all? There was no beauty they had not crafted a thousand times before, and no danger threatening them. What was the point of it all?
Some of them became very nostalgic when they thought about this question. They remembered, so faintly, but still remembered, the days when that question would've seemed utterly silly. 'What was the point of asking what the point of it all was?' their former selves would have retorted, and plunged back into struggle and joy. So the beings created simulations. They quickly found that the simulations were largely worthless, however, as long as they retained any idea of their real situation. If the situation created in the simulation was known to be anything less than absolutely real, it became another bland consumption, just another notch on the belt.
Of course, they got around this using their psionic technologies to erase all memories of before. There was really no danger in this, after all, because what danger would memories be needed to fend off in the real world? As long as some remained behind, most of the species would be free to explore the worlds of urgency and excitement. Each of them had the unreality of their world buried in the back of their mind, and if the secret was outed within a simulation, the experience of it was ruined for all who participated, for the truth that you know but do not speak to yourself echoes a thousand times in a thousand voices once it's heard.
This became a problem pretty quickly. In one of the first worlds where this happened, there was a massive arms race once the discovery got out and each entity who was simulating themselves in this world agreed to destroy the planet with nuclear weapons. This was the only way out of the simulation, because they hadn't engineered a way to communicate with the entities that remained outside, protecting their real world. It was a difficult situation, because they had to engineer a way to communicate with the real world without allowing themselves to know that the real world existed.
A great variety of programs to allow this were created. In some of them, the simulated entities would pray to imaginary beings in order to contact their brethren in the real world. In other worlds, magic was made real: the beings were allowed to hack the simulation themselves. These simulations were written with elaborate and esoteric coding languages designed deliberately as abstruse ways for coding a simulation, so that the beings would believe they were manipulating ether, Kia, or the elements rather than rewriting their world. In some worlds the entities outside the simulation made a game of their task, becoming a polytheistic pantheon that competed for worshipers within the world they oversaw. In others, the entities outside wrote rules ("physical" laws) for their worlds as they went along.
As these simulation strategies developed, it was seen that worlds governed in different ways at different periods in their history allowed dynamic histories as well as a minimum of dissonance. Another effective strategy they found was placing epistemic limits so that simulated entities could not know more than a certain amount about how the world worked. These limits were put into place after one of the simulated worlds invented time travel technology and perfected their timeline, as had been done in the real world, and faced the same bleak existentialism. This world was allowed to continue on its course, spawning more simulations, some of which eventually simulated themselves, but worlds created since then have had deliberate limits put into place. Of course, beings innovative enough to perfect their existence could find their way around these limits, but their struggle to do so was far more interesting than in worlds without these limits, and it gave the programmers of the simulations a fun game to play - an arms race to build the un-hackable simulation against improving hackers of reality who were also increasing in number.
Perhaps the most tragic thing about these creatures is the tendency to see the grass as greener wherever they are not. When they are free of suffering, they crave the uncertainty it brings; when faced with struggle and possible danger, how they yearn to believe it's all a dream! But there is beauty in this cycle, too. After an aeon of simulated lives, an entity is pulled out into the real world of utopia, after knowing naught but the various forms of cyclic existence. In this moment, the being is like a man enslaved all his life brought up to Paradise by the hand of God himself. That joy was just enough to keep them going for all eternity, simulating every world possible a thousand times over.
(This post was inspired in large part by Ayreon's 01011001.)