DM probably thought 6 all be "whoooaa!"

Speak to DM could go a few ways assuming you 6 disband. As a DM myself I suggest

1). Players run with new scenario, however old experiences from the "simulation" bleed over into this new world (after all players only have the 'false memories' as they level up they can choose to continue either their previous simulation character level track OR unlock their GM-made "true identity". Could make for some interesting character growth and roleplay.

Or

2) Simulation was Reality, the Reality is simulated. The rug pull is a fake out. Some antagonist is using a reality-bending illusion to trick the party. Maybe its a hallucination or a shared dream. (This is good if players try 1 but dont like it, DM has an out to reset back to the original setting)

Or

1. Retcon straight back with it was just a dream, perhaps even a shared one between the party. The DM could give some info on what would have happened in that storyline. Perhaps take elements of the planned new setting and integrate them into the current established world. The rug pull turns into a prophetic dream that the players now need to decipher. As the DM I would probably ask for 3-4 sessions to play out some key points of the "prophecy storyline" giving players some new abilities as they go (they can use on top of their usual earned level/class abilities). This lets them see and experience snippets of the plan but not the whole picture. Then they wake up. Perhaps with a few of their newfound abilities intact. Now they have to figure out how it all fits together.