Some combination of the holographic principle and the the information overhead of classically representing a quantum state? (I don't know, I'm not a physicist.)
Surprised that the currently exponential overhead for simulating a quantum system is a distant second in commenter objections here. "Simulating the universe" in the holistic manner that I feel such a phrase entails would require at least clearing that bar (say, with a quantum computer? Or at a longer shot, showing BQP = P?), and that's before thinking about the status of quantum gravity.
That's not even my second objection. My second objection is the rate of Entropy of the computer that would be using to make that computation, the amount of mass of the computer that would be required to use and how long it could continue to make computations before the heat death of computer. Also you would have to consider the fact that as performing multivariate calculus of the expanding universe that is completely gravitationally bound would require that the computer that is performing the calculations that govern the simulation to expand at a rate faster than the simulation that it is computing. Eventually what ever the rate of Entropy is in the Universe of the computer that would be simulating our Universe is would exceed the capability of it to exchange information from one end of the machine to the next as it eventually starts to expand faster than whatever the equivalent of the speed of light would be in the simulating universe.
There's a lot of subjectivity to the "we can simulate the universe" variety of claim stated by the article, but I'd tend to forgive considerations of the scale of the entire universe in that claim. It should be obvious that simulating the trajectory of every last particle is straight up impossible. (Even in principle: you could probably even show outright impossibility on logical grounds with a diagonal argument a la the time hierarchy theorem.)
Instead I'd take it as meaning something like, "any slice of physical phenomena there is to observe in the universe, we can simulate given reasonable resources to do so." So, put an imaginary box around some reasonably isolated plot of reality, pick your precision and your time scale, and you could replicate what happens in that space with a "reasonable" computational resource overhead. That's what elevates the quantum simulation overhead objection to number 1 in my mind.
Surprised that the currently exponential overhead for simulating a quantum system is a distant second in commenter objections here. "Simulating the universe" in the holistic manner that I feel such a phrase entails would require at least clearing that bar (say, with a quantum computer? Or at a longer shot, showing BQP = P?), and that's before thinking about the status of quantum gravity.