People who are lucid dreaming simulate a full reality that’s nearly indistinguishable from the one they find themselves in during waking time.

You're not describing a simulation, you're describing a perception. A person perceives that they're seeing an indistinguishable reality, but we know that people's brains do not have the computational power to simulate molecular motion in even a cubic centimeter of air.

Or, if they look at the stars, are they then simulating an infinite space with infinite mass and all of the associated interactions inside of their finite brain? Of course not, that would be impossible.

Dreams are perceptions, not simulations.