How do you make a virtual reality when you don't know what reality is?

This is quoted from a post at SLUniverse by SuezanneC Baskerville:

"I was thinking the other day about how someone that believes in "God" would need to include "God" in a virtual reality of their design, if they wanted it to reflect this to them important part of reality, and how odd it would be for me as an atheist to be in a VR in which their was a VR god.

I saw an event listing for a religious group. In a VR with a god built into it, the program could listen to your chat and attempt to detect instances of prayer and make God appear, or maybe make some cool particles radiate from the church building or some other such effect.

Second Life doesn't go very far in terms of modeling reality. There's a deformed sheet that is the terrain surface; no magma below wanting to bubble up and breath through. There's no simulated oil or mineral deposits below, no abilty to deform the terrain by doing anything that employes any part of the simulated reality, only through the external land editing dialogs. Avatars are hollow, no bones or muscles or spleens or any of that complex squishy junk we have inside. There's nothing to correspond to atoms or molecules or cells or minerals or elements or compounds or the sun and the planets. SL's modeling of reality is very superficial.

In the movie "Matrix", is the simulation supposed to be done in much the same hollow and superficial way that SL simulates reality, or are there supposed to be simulated atoms and molecules interacting according to physical laws which give rise to and mesh with the simulated reality looked at at the object level, the level where things look like baseballs and rocks and grass and animals and such? Did the folks in the Matrix have simulated hearts and virutal blood flowing through pseudo-circulatory systems, or was the red stuff that spurted out of them when they got shot just a particle effect responding to a collision event between bullet prims and avatar mesh?"