Imagination = Reality
Once you imagine something, it exists (in your mind). If you record your imagination, either through writing or visual art, you can share your imagination with others.
Fictional people, places, and things can exist in your mind and the minds of others. Their memory of your imagination will be the same in their minds, as a memory of anything that happened to them in reality. In that sense, fiction is as real as reality. A simulation is as real as the original.
Even reality is just a memory of what happens after it happens. You don’t see things as they happen; your brain reconstructs events split-seconds after they happen. All of “reality” is a construct of your brain.
Visions constructed in your brain of fictional stories and characters from novels or movies can be just as meaningful as true events that “actually” happened in your life. Your memory of Harry Potter, Voldemort, and Hogwarts exists in your mind in exactly the same form as a memory of your grandfather or your first kiss.
Or perhaps a better way to think about it is that your “real” memories are just as fake as your memories of fiction. Because all of your memory is a construct—a re-creation—and it is often flawed and misremembered. Your mind blurs and alters events in your memory as you see fit.
If reality is imagination then every fictional story is just as real as reality—which isn’t very real at all.