In Men in Black II (2002), Will Smith learned that a miniature civilization existed in a locker. Later, Will Smith’s character learned that our civilization was in a locker of a larger civilization.

By thinking of memory usage, you’re restricting yourself to our perceived physical limits withine our perceived reality.

But, what if the things running the simulation did not have those limits? E.g. maybe data could be stored in an infinite number of multiverses outside of the infinite simulations being discussed. Any of the simulations could potentially simulate universes like ours while still allowing those simulations to contain others, to be contained by others, to have references to others, to have reflective references, etc. The makes anything and everything possible while not necessarily removing limits we have in our own simulation. It just depends on what’s running the simulation.