Why do so many people believe we are in a simulation?

We all are actually possessed by spirits in our body. They all are controlling us. Its the duty of our brain to select the good spirit instead of the bad one or else your fate can be really bad. So use your brain and do the right job.

Ironically, those who believe they are simulations...aren't believing....they are simply performing as the simulation dictates.  So there can be NO ONE that believes they are a simulation.

I think the idea is rooted in the fact that our experience is indeed a simulation of a sort. I don't mean a simulation like the one you describe. I don't mean a simulation that is being authored, controlled, and fed into us by some outside entity. I mean a simulation that is created by our own brains.

When one holds something in their hand, feeling and seeing it is both a physical and a mental experience. The physically existing sensory receptors in the fingers react to the thing's physical qualities, such as texture, weight, and temperature. The sensory receptors in the eyes react to light waves that reflect off of the object and onto the retina. These experiences are physical. The information that is conveyed, by sensory nerve impulses to the brain, is used to construct a non-physical mental image of the object. Our physical bodies experience the physical world; our minds do not. The mind experiences only a conceptual representation of the world.

I believe that it is this underlying fact, which (it seems to me) most people are only vaguely aware of, that is the root cause of simulation delusions of the type you describe. 

Clearly that sort of person exists where you are, or you would not have asked that question.

Where I live in southern England I have never come across anybody with that sort of ridiculous idea in their head.

All this matter assimilated in one being with enough intelligence to create a civilization of like matter coordinated more or less in the same way.  It can an assimilation and we can be the assimilators.  

I'm sure the number one explanation is a movie, The Matrix. I'll mention that there are scientists kicking around this idea, which dates back to ancient Greece. Zeno of Elea argued that the material universe is an illusion, citing his famous paradox. If you shoot an arrow, it has to go halfway there, 3/4 of the way, etc. - in other words cross and infinite number of distances in a finite amount of time, which is logically impossible. In the video, look at what physicists say about things being "pixelated."

 https://www.youtube.com/watch?v=w0ztlIAYTCU&t=231s

Pyrrho of Ellis brought up the notion of the epoche, or the problem of the criterion:  not simply the regression unto "First Cause" but what = Truth.  He and later contemplators, like Descartes, noted that even atom-counting (or bean-counting, back in the day) was not 100% proof-positive, e.g. for the "what iffers" like Hume.  So, if you're a what-iffer on the opposite side from Hume, then there could be a Big Causality.  A female scientist at Harvard shows more common sense:  Dr. Lisa Randall, a physicist of the first order, says, paraphrased, "Why would a higher species want to simulate us?"  Thus, one may note the solipsism and even fear of a negative what-iffer, and compare it with the similar general condition of solipsism of the science fiction engineer/what iffers who are into building things.  "Why would a Level III civilization want to simulate us?"  Very perceptive, almost like the difference, writ large, between action figures building a fort, and a proper tea party with dolls.

The question of the simulation is a philosophic issue:  https://en.wikipedia.org/wiki/Simulation_hypothesi... and

Plato's Cave allegory and even such as 

https://plato.stanford.edu/entries/baudrillard/

It doesn't come from philosophy or philosophers.  Many of the people who believe such things are too stupid to know what philosophy is. It comes from ignorance, poor education and a psychological need to believe they are not responsible for all of their own self-inflicted problems. For more insight, ask in the psychology and sociology forums instead. 

Ironically, “This week the CDC quietly updated the Covid number to admit that only 6% of all the 153,504 deaths recorded actually died from Covid

 That's 9,210 deaths

Your first error was "I've listened to so many people on the internet say " Most people on the internet are the same morons you have to deal with on a daily basis . Just ignore them.