I'm quite surprised that this has never been brought up on this forum since i've been here [unless you consider this the same as the 'Sims Theory'] so I thought i'd make a quick post explaining some aspects of this theory.

It does suggest that your reality is not real, which can annoy some people.
If you're likely to get angry because you're reading something which says you're not real then don't read on.

This theory is known as 'The Matrix' because of its similarity and I dare say Birth in the film franchise by the Wachowski brothers. If you haven't seen it then you will probably need to pay close attention, if not then you will be familiar with what this theory is already. I will be relating things back to the film because it explains things and provides relatively 'realistic' ways in which this could occur.

Reality 1 = What is really real.
Reality 2 = What we see as real.

The theory suggests, from my interpretation, that we are in some sort of coma in Reality 1, this might have been induced by an alien race or some sort of super computer. Much like in the film there are human farms in Reality 1 in which people lie in large tubs of goo.
While in Reality 2 we walk around and live our everyday lives.
More extreme versions of the theory suggest that we are born as humans but our brains are removed by the 'aliens' to conserve space in Reality 1 and make control over the systems which influence Reality 2 easier. Perhaps we are floating in a jar right now.

Moving on, our perception of Reality 2 is being controlled by the aliens influencing our nervous systems in Reality 1.
In the film they do this by plugging electrical charges into the bodies of the humans through holes which lead to specific points in our nervous system, the most famous one being at the back of the neck leading to the base of the brain.

These electrical charges send the brain the exact same impulses and signals the brain would receive normally in Reality 1, but while the human is in a computer programmed Reality 2.
[Side thought: perhaps the lack of alien technology explains why we are only able to access a portion of our brains?]

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Throughout the film there are many times when Characters will propose things which factor into the theory.
For anyone who has watched the films you are probably scratching your head as to why I am saying 'Aliens' instead of 'Robots' as you know they really are.
All of this crosses over between the two but 'Alien' seems more realistic than 'Robots', however for this part of the theory i am just saying robots as it wouldn't really be possible with aliens.
In the Matrix: Reloaded, Neo is sat with The Oracle on a bench, she [or it] begins to explain to him that any Ghost he has heard of or alien sighting is really a programme doing something it shouldn't be doing.
This implies that the programmes which run our Reality 2 have some form of conscience but are still assigned specific purposes,which some decide to not abide by.
Perhaps this is where 'supernatural' comes from.

There is a lot more to this theory, but I would prefer not to make a page of information then have nothing but 'tl;dr' responses.

If you haven't seen the Matrix I would seriously advise watching it, it is mind bending science and philosophy combined with fast paced action. Well worth a watch, and I hope this was well worth a read.

- Theology