First of all, as the old joke goes, this thread fills a much-needed gap in the whole "gamism vs. simulationism" discussion. I can't tell you the number of times I've seen "gamist" thrown around as an epithet, without any real discussion of what it means, and that often leads to a discussion that goes around in circles. I'll definitely bookmark this thread in case it ever comes up again. What's been said before echoes a lot of what I've already thought about this topic. But anyway...
There's never been a version of DnD that I'm aware of that hasn't scaled the level of monsters to the PCs. Earlier editions were less methodical about it, but even in the 1E days it would be unusual for a 10th level party to fight encounter after encounter with a handful of orcs just because the wandering tables said so.
Basically, I think the treasure parcel thing and encounter scaling is a bit of a gray area. I would call myself a simulationist and yet I don't think these conventions are inconsistent. After all, it depends (as has been said) on what you're simulating.
By your reasoning, the character generating process would indicate that no one in the world starts off life a child, serf, or without an 18 in some attribute. If you make the assumption that the PCs are heroes, there's nothing IMO that's inconsistent with simulationism that means the PCs have to play by the same rules as the NPCs.
I choose to tell my PCs that the game is going to play out along certain lines. For reason of inexplicable fortune or whatever, they are playing a character of a race/class/stats of their own choosing. If I wanted to use treasure parcels (and I don't) I would explain them as being a result of fate. Other people don't find treasure parcels. Other people aren't lucky enough to almost always encounter monsters suitable to their level. That's just fate.
My DnD game is choosing to tell the story of heroes with a plausible chance of survival who have the opportunity to do interesting things. In the old days of DnD IME, people would roll up characters using the 3d6 method. A bad result would mean you either crumpled up your character sheet, or had your character kill himself off, depending on whether the DM wanted to face the music or not.
So fate is just a way of saving yourself from having to play through a bunch of uninteresting existences until you get to one that entertains you.
The game is taking place within a certain set of possibilities - the story line/fate/what-have-you precludes that you start off life as a serf, or that a meteor comes down from the sky and destroys your entire kingdom on the first day of your adventure. These things are possible in reality of course, but I think it's reasonable that the game of DnD select, from all possible fates, the ones that are interesting and heroic for the players to explore. Otherwise your character could just be stuck with feudal obligations and having to farm for the rest of his life. And how good of a game is that?
And another thing - and this is something that's commonly missed in a lot of these discussions - all the level and difficulty scaling isn't based on the level of the
players. It's based on the level of the
encounter. So it makes perfect sense that higher level encounters would have tougher monsters - that's the definition of a tougher encounter. The only "unsimulationist" part is that higher level players face tougher encounters. If you interpret that as the encounter somehow "auto-scaling" to the player's level, like in TES:Oblivion, then yes it seems silly and "unsimulationist." But if you interpret it as players simply deciding what adventures to go on based on what they can handle with their abilities, it makes perfect sense. The only change you would have to make is to allow players to choose to go on missions that have higher (or lower) level encounters than normal - but that doesn't require any real changes to the rules, just different scenario design.
To give a real life example, the average graduate student in math is going to be taking math tests with much harder questions on them than the tests that a freshman would be taking. But that's not because the same professor decides to give different tests to each student in his class depending on their ability - it's because the graduate student is going to be taking much higher level classes. And students can choose what classes to take, so if each student chooses a class that is difficult enough to challenge them but easy enough that they can still be successful, then they will effectively sort themselves according to ability. The same thing applies to adventurers in a D+D world: they want to go on adventures that are more difficult because tougher monsters bring greater rewards, but want to make sure they stay within their limits to avoid dying.
Of course, this analysis depends on the characters being able to predict beforehand how hard each mission would be, which may only be true in certain circumstances. But it's perfecly reasonable that those circumstances hold in many cases - in a world where monsters are divided into varying "power levels," it's reasonable that if you know what type of monsters are in the area, then you can make a good guess at its power level.
And if that still doesn't work for you than you can say the following: The players do sometimes run across monsters much weaker than them, but those monsters either flee due to being outmatched or are so easily defeated that it's not worth bothering to play out the combat. And players don't randomly encounter a monster way more powerful than they are for the same reason they aren't killed by lightning on the way home from the market, and for the same reason that Gizmo states in regards to character creation: we just prune those branches of the decision tree because they aren't any fun to play. Of course if you want to hit the players with a monster they can't beat and see if they are smart enough to run away, don't let me or the DMG stop you.
Also, another general comment about "simulationism," and related to what Irda said. The OP said that "monsters should carry treasure that is realistic within the confines of the encounter" and "rewrite item costs to keep the game world's economy in mind." How do we know what's "realistic" for a monster to have, or how much an item "should" cost? If you say things like "zombies wouldn't collect lots of items in real life," or "plate mail is worth more because it takes longer to make", then you're importing assumptions from outside the game (either from the real world, or from other fictional media) into the game world. And there's nothing wrong with that, but you need to make explicit which "real-world" assumptions you want to adhere to, and which you don't care about.
A while ago, I made a similar point (in a different context) in this post:
http://www.enworld.org/forum/genera...roblem-balance-how-get-rid-8.html#post4657831
(if you can't see it scroll down to a little above the middle of the page - post on February 8, 6:04 PM)
Another real-world example: Imagine a group of people in the 11th century trying to come up with an RPG about "life 1000 years in the future." And imagine the following conversation:
A: "So, in the game, in order to communicate, everyone will carry around this little device that they can use to contact other people. And each device has a number, and if you know the number then you can contact the other person."
B: "That makes it too convenient. The game's no fun if whenever you're in trouble you can just use the device and get someone to get you out. You should have to set up messengers - that would be more simulationist."
A: "Okay, let's make it a little bit harder. Let's say you can only use it a certain amount of time a month. If you exceed the limit, you have to pay extra money. And every so often, you have to stick a little rope kind of thing into a slot on the wall in your house, or it will stop working. And it won't work if you're underground."
B: "Those restrictions make no logical sense. I can't think of any reasonable way such a device would work that would have those restrictions. Clearly those restrictions are only there for convenience of gameplay."
My point, of course, is that just like people in the 11th century would have no mental model of how 21st century technology works, we have no mental model of how magic would "really" work. Or more precisely, since we
define the magic system by our game rules, it makes no sense to say that a magic system is "less simulationist," because there's nothing outside the system to compare it against to see if it "simulates" accurately. And even if a game world element is not explicitly labeled as "magic," (i.e. it is not a magical item or a power in the arcane or divine power source) the same argument can apply: the natural laws of the game world are different from those of ours, and the rules are our main window into how the game world works.
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But anyway, here's a good place to start in terms of interpreting things in a "simulationist" manner.
1. The PHB and MM are interpreted as "natural law" - that is, they define how the world works. For example, PCs really do have "hit points" - hit points are a physical property of a biological creature, the same way that voltage is a physical property of a battery in real life. That doesn't mean that characters automatically know what their hit points are, or even that hit points exist - just like measuring the voltage in a circuit requires special equipment, and someone living before the age of electricity wouldn't even know that "voltage" exists. You can, of course, still change rules as necessary in order to prevent broken combos, clarify ambiguous passages, maintain game balance, or add in additional possible actions as necessary - but you don't need to change any existing rules solely because of "realism" or "simulationism."
2. The DMG (except for Chapter 3, and the "Traps and Hazards" section of Chapter 5) is interpreted simply as guidelines for the DM on how to design balanced adventures, and is not interpreted as binding in any way. Things like what types of encounters show up where, how much treasure to give out, and so on, would be decided by the DM based on what would be logical in the game world. If you want a system for helping you making these kinds of decisions, we can help you design one, but we would need a lot more information on what you want your game world to look like (in particular what you want to be different from the existing 4e world-model).
