The behavior in a simulation is by necessity idealized or simplified to a degree, i.e. it is based on a model of reality. Models can be of varying degrees of fidelity, meaning how closely they approximate reality is a function of purpose and acceptable cost.
Simulation is the imitation of the behavior of some process, system, or entity from a real-life domain. This imitation is carried out based on a model, which is typically built and then run on one or more computers. This is why the field is actually called modeling and simulation, and is often referred to as M&S.
Interestingly, a simulation can be built of something that does not yet exist, as a means of testing new ideas.