Simulation makes the most sense to me. I'm not sure if we are just NPC's and the big dogs are the player characters. Either way, I feel like we are reaching that point technologically where the idea of a semi-sentient simulated reality isn't out of reach.

I would love to think we are just bored eternal beings that pick out lives to try in the great game of mortality. With infinite time on our hands, trying out different types of mediocrity would eventually be interesting. Being the hero probably gets old after a few million iterations.