If you want to say it like that, fine. As long as you understand that we might be simulated life talking about simulated consciousness in our simulated universe.
I don't see the need to make such a distinction, though. We are alive, we are conscious, relative to the space we inhabit. If we create a simulation, and there is simulated life in that simulation, then that life is alive relative to the space it inhabits.
It is always relative to the same space.
The strawman people are up in arms about is the claim that a simulated cell would be alive relative to our space. But that is absurd, and nobody has made such a claim. Quite obviously such a cell would not be alive relative to our space because it is nothing more than bits of data in a computer in our space.
That is such a stupid claim, in fact, that I didn't think it was necessary to clarify that I was not making it. I didn't think I needed to say "when I claim that a cell in a simulation is alive, I mean it is alive relative to the simulation space it inhabits, not that it is alive relative to our space." Apparently I did need to say that, though.