To clarify: without being able to simulate the universe from within the universe itself (i.e. needing to resort to some "outside" higher-fidelity universe), then the word "simulation" becomes meaningless.
We could just as easily refer to the whole thing (the inner "simulation" and the outer "simulation") as just being different "layers of abstraction" of the same universe, and drop the word "simulation" altogether. It would have the same ontology with less baggage.
(1) Person notices that computer simulations are getting increasingly powerful. Maybe we will be able to simulate something like the universe one day which will have life in it.
(2) If simulating the universe is so easy and inevitable, what are the odds that we are at the top level?
The idea in the article would refute the inductive step.
The said model is significantly misaligned with human perception regarding the start and edges of spacetime, so it’s completely valid to point out that it’s just a model (and that we might be in a simulation).
No it doesn't. The article describes a proof that it is impossible for a computer to simulate this physical universe with perfect accuracy; but, that's not actually a problem for Nick Bostrom's simulation argument. For the simulation argument to work, you don't need to simulate the universe with perfect accuracy – just with sufficient accuracy that your simulated people can't distinguish it from a real one. And this proof isn't about "ability to simulate a universe to the point the simulated people can't tell that it is a simulation", it is about "ability to simulate a universe with perfect accuracy". So the proof isn't actually relevant to that argument at all.