Set 100 years into the future, a mysterious meteor landed in the pacific ocean and since then reports of supernatural phenomenon exploded exponentially throughout the world. People waking up the next day to realise they have magical powers such as levitation and telekinesis etc, and there are also towering monsters terrorising cities. Soon it is proven effective to combine conventional weapons with magic, to defeat waves of attacks by the monsters. It has also been established that those involved in slaying of monsters will find themselves getting stronger at controlling magic... Even those fresh recruits training inside a simulation! However statistically speaking, there is no significant difference in magic power gained from slaying real monsters, compared to destroying a virtual one. So why would many veterans shun away from such a free and painless method to build up their magic power?
This is actually a trope in Asian (China, Korea) webnovels ;) both sudden appearance of magic and simulations in a magic/cultivation world. Combined below are my insights and ways actual novels solved this. Usually it is not a single reason but a combination of a few. Also please remember that how important a specific reason is will vary on a person to person basis - this usually creates interesting clashes of character.
Conservation of magic
Magic doesn't come from nowhere - you need to get the cores of real monsters to power this simulation. And since simulations are not free, they're mainly monopolized by elite organisations fostering their next generation.
Magical monsters have much valuable loot, such as scales or bones with parameters exceeding known alloys. If you are powerful, you will want money as well - farming monsters is the fastest way.
Danger to humanity
Those monsters are dangerous. A large group (an horde?) might wipe out small cities. Governments do what they can to make those veterans and make them fight in defense of humanity. Both giving them benefits and using coercion. Usually the control comes in the form of even stronger humans who do it out of sense of duty. And those monsters are aggressive towards humans.
This has been described by @Plutian - simulation is never a substitute for real life.
Dying in simulation is not lethal, but has it's drawbacks as well - like being unconscious for a few days, loss of power or some other form of damage. Usually mental. (Hat tip to @Plutian).
Lack of data
Those strongest monsters are too dangerous or rare to gather enough sensor data. Needless to say, more powerful monsters equal faster growth. And more danger.
Compared to mental wounds - such as those inflicted by a death in simulation - flesh wounds are much easier to heal. Perhaps your civilization can regrow an arm in a matter of weeks? This greatly lowers the risk of fighting in real life.
There are not only titanic monstrosities which could level a city by themselves, but a plethora of smaller monsters. Those are available closer to the city and can be slain for both power and quick buck. People who wish to become monster hunters will catch those weak monsters for sustenance.
Higher levels of power need exponentially more magic to progress. Slaying monsters below your level doesn't gain you much. With powerful monsters either expensive to simulate or just unavailable someone wishing to grow must go out for a real fight.
Fame and social pressure
Who doesn't want to be hailed as a hero? As the defender of humanity? Even psychopaths will admit it's useful. To the contrary, people only spending their time in simulations are shunned as cowards who don't dare fight the monsters in defense of their fellow citizens.
It's a trap!
This idea came in comments from @AdrianColomitchi.
Those simulations aren't (contrary to popular belief) ran by humans. They are ran by the monster overlords! Both to get magic from the humans dying in the simulation and to learn how they fight. While not known publicly, it's an open secret in the combat arms - so the veterans will not enter the simulation if at all possible and hold themselves back if they have to.
When it comes to veterans, the most probable reasons would be social pressure, sense of duty, loot and simulation inadequacies.
P.S. Check out Number One Dungeon Supplier - it's a novel about a person running a shop providing such simulations, might have some more insights for you.
It might not be free and painless.
Depending on how your simulation works, there might still be drawbacks. For example, defeat could result in a net loss of magical power and/or morale.
Also, creating a simulation isn't free. Simulators might be expensive to buy or rent, and don't run for free either. When you make no money from monster parts or loot in a simulation, suddenly half the appeal of fighting is gone.
Lastly, and probably most importantly, simulated experience is no substitute for the real deal. No matter how well you program a monsters expected behaviour, a real monster is always unpredictable. It will do unexpected things. When you only fight the simulated one, you will get good at predicting the simulation. When then fighting the real deal, you might not nearly be as experienced as you expect. And you might have many bad habits which might work against the simulation, but are useless or even dangerous in real life.
The magical phenomenon is an exponential factor. That means the monsters also appear exponentially... except if you systematically murder the population to halt the growth.
As useful as it is to boost your power in the simulation it also means time was wasted not killing monsters and giving them more time to grow out of control. If they've already had the monster population go out of control once and breaking them took a ludicrous toll of manpower, lives and material then the simulation will only be used for recruits to ensure their early survival.
It leads to bad habits that could get them killed in a real fight
The real monsters have very clever or unpredictable behavior that simulations can't quite get right. The most successful soldiers are the ones who can understand how the monsters think and predict their actions.
Overtraining on simulations gives you the wrong set of instincts that could easily lead to a fatal mistake in a fight. If the monsters are smart they might even know the kind of mistakes these simulation-trained humans usually make.
Because that's how it used to be
Maybe simulations are a new thing, and older people prefers to do things how they ever did. They might believe simulations are not just like real life, they don't believe it really prepares one to a real fight. (Just like how older people prefers to shop at physical stores vs online)
There are a few ways to do this; but you can make it so that seasoned "real" veterans look down on those that train in simulators. Saying it hardly counts, it's not like the "real" thing, it's a cowards way. They can say the people are lazy or not contributing to society.
If you do the deed, ankle deep in mud, the gain is thousand times greater. In the simulation you would need to off many more to achieve the same gain.
So the simulation is handy to turn Enlisted "cannon fodder" into "Seasoned Cannon Fodder". From there, the rate of advancements needs hands on experience.