If Man is the measure of things, as Protagoras said, then there is no complete reality; but being there certainly is, even then. (Peirce 7.349)
The big bearded philosopher Charles Sanders Peirce argues that what we called reality was made of two separate states: existence and reality (being). Existence is a special mode of reality, which, whatever other characteristics it possesses, has that of being absolutely determinate. Reality, on the other hand is a special mode of being, the characteristic of which is that things that are real independently of any assertion about them (CP 7.349). How are we to make sense of this?
Peirce asserts that whenever we come to know something as a fact, it is by its resisting us. The resistance shows us that something independent of us is there (CP 1.174). When anything strikes upon the senses, the mind’s train of thought is always interrupted; for if it were not, nothing would distinguish fact from fiction. With ever interruption there is always resistance, and so difference between the operation of receiving a sensation and that of exerting the will is merely a difference of degree, not of kind. When we pass from the consideration of the appearance of a fact in experience to its existence in the world of fact, we pass from regarding the appearance as depending on opposition to our will to regarding the existence as depending on physical effects. Thus reality consists of the aggregate of physical effects and of facts which persist in forcing themselves upon our recognition as something other than the mind’s creation. If we experienced no such persistence, life would be a mere dream. As Phillip K. Dick remarked, reality is that which, when you stop believing in it, doesn't go away.
A fiction on the other hand is a product of somebody's imagination; it has such characters as her thought impresses upon it. Fictions are real in the sense that we really think them. But though their characters depend on how we think, they do not depend on what we think those characters to be. A dream, therefore, has a real existence as a mental phenomenon, because somebody has really dreamt it; and moreover it does not depend on what anybody thinks was dreamt, and in this was Peirce says is completely independent of all opinion (CP 5.405). Therefore the thing dreamt retains its peculiarities by virtue of no other fact than that it was dreamt to possess them. Thus we may define the real as that whose characters are independent of what anybody may think them to be.
Applying Peirce's distinction to virtual reality we can say firstly that everything that is thought or experienced has a reality of a kind, this includes life as we experience it, dreams and mediations. Therefore if we want to distinguish these states from each other, judging them simply on the basis of how they appear will not provide us with a solution, since the appearance of reality is at the same time merely the reality of an appearance. However using Peirce's concept of resistances. we can distinguish a hierarchy of reality effects if we consider the resistances that each state imposes upon our being. If we can outline, at least in theory a way of measuring the reality effect of a virtual reality simulation depending on the resistances it offers. We have a way of determining the reality effect of a simulation.
For example in the film The Matrix (1999) the after Morpheus has explained the nature of the matrix to Neo, he exclaims "so none of this is real?" to which Morpheus replies, What is real? if real is something you can hear see taste touch smell then real is just electrical impulses interpreted by your brain." But if we apply Piece's rules we can say that whether the Matrix is real or not is actually immaterial, because if the matrix can affect a person physically, indeed if the Matrix can actually a person, then that person would be wise to take it seriously, whether it was real or not.
Lets take another example, imagine that you are in a virtual reality simulation built by a particularly sadistic engineer. The simulation looks really low resolution, it may even consist of just wire frame graphics, but inside the date gloves you wear are place little knives, so that when you touched a sharp object they would cut your hand. Now you become aware of the fact that brushing against one of those unrealistic wire frame objects actually results in a physical injury and this would mean that you would take the simulation much more seriously that say a simulation with much better graphics but whose surfaces did were not felt to be sharp enough to result in physical injury. What should be hopefully apparent from this discussion is that which we regard as real is not determined by mere appearance: reality is not a symptom of high-resolution graphics but is created in the resistence it offers. Thus reality is a sign of mattering.