It's actually just a fun hypothesis, but too many people believe it's likelier than it actually is. The probability of it being true is not high, or low. It is unknown. There are a couple problems with it:

• it assumes you can artifically simulate a consciousness (qualia). Sure, you can simulate a brain on a chip, but does it have qualia? Who knows. Imagine for example that it's not possible to simulate a consciousness (qualia). No matter how many simulations there are, or how many layers deep, all conscious beings will only exist as brains in base reality. In Bostrom's case, he assumes you can artifically simulate a consciousness. Can you? Is it reasonable to assume this? Maybe. But if it's not, then the simulation hypothesis crumbles completely into dust. One feasible solution is to hook up biological brains to a full dive VR thing, in which case the person is a brain in base reality, but experiences only virtual reality. It's not known whether a non-brain entity can have consciousness (qualia), which would exclude any tier 1 or higher simulations from having consciousness.

• this second reason is more restrictive: if a universe has a time limit in base reality (finite amount of energy, entropy increases until max or big crunch), then the civilization will last a finite amount of time. So there is a limit to how many simulations one can run. The limit on the number of simulations run by a second tier (simulated in base reality) universe is even smaller. Also, the higher the fidelity of the simulated universe the smaller this number gets.

Since the status of both these things is unknown, we can confidently conclude that the simulation hypothesis is not known to be probable or improbable, and anyone who claims that it is likely, or unlikely, is completely full of shit.