Yeah, this is very much something I have imagined, I think these concepts are hard to hold in our minds because they are so new to society, before the internet this kind of thing only ever existed in debating the difference between reality and a dream.

The easiest I think would be to watch a movie like Inception and picture each level deeper as a new computer simulation and dying in reality would be the point you "wake" into the level above in the simulation. (added an image from inception to help others realize the correlation)