Honestly, when I first heard this from Elon Musk, I thought he was crazy, but after working in 3D video game programming for nearly a year, I think there is strong chance he is basically right.

Advanced intelligence with advanced computing power (much more advanced than where we are now on Earth) could procedurally create a “universe” which is probably indistinguishable from what we call “our universe” and “life”.

See also, https://www.youtube.com/watch?v=GZgBcRhGPqs.