The simulation software has been developed to ignore the construction of circuits and virtualize and operate everything on the simulation program. The connection between the computer and the Arduino board is a serial connection that forwards everything to the simulator.
The simulator has a library included in the Arduino sketch to communicate with the simulator software. By changing the instructions such as digitalWrite and lcd.print with a capital letter as the first letter and removing the point in the instructions that control and read in the IO, the simulator library becomes active so that it sends all data.
digitalWrite becomes DigitalWrite, analogRead becomes AnalogRead, lcd.print becomes lcdprint. There is a list of instructions present in the user manual, support page and on the course.
There are 5 steps needed to make an Arduino IO simulation