My protagonist is a magician from Sword and Sorcery world with a soft magic system which wakes up in a spacecraft with a non intelligent voice interface which does exactly as told without any regard for safety. The protagonists purpose is to be an AI for space missions ranging from flyby missions on planets or to help colonies from space.
The virtual world
The continent is populated by a 100 million human-level intelligent humans/elves/beastkin/dwarfs and a supporting ecosystem including goblins, horses, rabbits, birds, ... such that all 100 million human level being have a realistic environment and it is not obvious that it is a simulation. The purpose of this simulation is to find individuals suited to solve problems in real space the simulator universe is facing. The simulation gives access to all five (and possibly more magic related) senses to something that runs the intelligence. Actions are not just animations but actual kinematically simulated. When a arm is cut, it is not a symbolic representation saying that but an actual modification of collision boxes and all that stuff. The magic system is designed to ease the transition with the ship in the real world, so that many capabilities of magic map to functions of spacecrafts.
A world simulation will take enormous level of computation. In particular if 100 million human level AIs control the player character and need to think that the world is real.