Simulation is the use of computer programs that embody models of real or imagined systems in order to study the behaviour of these systems by executing the programs and observing their output. For example, suppose aerospace engineers are designing the wing of a new aircraft. Before going to the expense and complication of building a physical model of the wing and testing it in a wind tunnel to see how it behaves, they can write a simulation program that takes into account the relevant features of the wing (e.g., its shape, weight, strength of the material, etc), ignores the irrelevant features (e.g., the colour it is painted) and tries to predict how the wing will behave under widely varying conditions.
Typically, a simulation program will be allow a number of parameters of the model to be adjusted, to see the effects of different values. For example, in the simulation of an aircraft wing, one might vary the length and curvature of the wing to see which combination of parameter settings gives the best result.
An aircraft wing is a physical object, but we can also simulate abstract things, such as the scheduling of processes among CPUs.