The simulator doesn't have a camera. The android emulator allows to configure the camera and use a picture, it's very handy to test your qr/barcode reader without needing to use a physical device. Maybe this also allows to use an image as camera?
It’s been years but I ran into a problem with a notification extension years ago. Worked fine on simulator, not on device. Turned out it was because I was using a HEIF image and (I think) the on-device extension was trying to use hardware decoding and didn’t have access to it. Meanwhile the simulator had no such sandboxing restrictions.
The difference doesn’t matter until it does, and then it’s infuriating to work out what’s going on.
It would also make testing far easier. I got bit with something that failed on real life iPhones with language set to es_US that worked fine on the simulator.