Magic may well have been real. Healing crystals, shamanry, witchcraft, voodoo, things of this nature may have been real at one point and have since been patched out. These could have simply been glitches in the program.
We’ve all heard of glitches in games that can be exploited that eventually get patched. Could have been real.
While the creator of the simulation developed the program using his brain, and one could argue thoughts are simply hallucinations of the brain, inside of the simulation we are no longer a part of the “creator”. They may have dreamed us up, but once inside a self contained system we couldn’t be the hallucination of his brain because we now exist outside of it without further control from the creator. (Assuming of course they do not continue to mess with the initial program.)
An interesting though.
Assuming that the brain is both all knowing and immortal, I would assume that it is capable of creating everything on its own inside of itself. Much like a dream, but far more detailed and consistent.
Like our own brains, I would assume it is happening within the biological structures present in the brain. Because it is just a brain in space, I don’t think it is safe to assume it could build foreign structures for use. I would also assume that any changes made could be known by everyone, but likely ignored to maintain the reality. We could explain these changes with the mandala effect, just for fun. Some of us remember, some of us don’t, and this is because the brain is incapable (like us) of full control of every mental faculty.