The Simulation Room is where new scarers practice scaring using a mechanical child. It was first seen during the opening scene of Monsters Inc where Thaddeus Bile practices scaring the robotic child, but ends up getting scared when the child screams. Ms. Flint also points out he left the door open.
It was also where Sulley scares Boo and realizes the damage that they had done to the kids they had scared. It is also where Henry J. Waternoose III shows his true colors and banishes Sulley and Mike Wazowski to the Himalayas.
It is also where Sulley and Mike Wazowski tricked Henry J. Waternoose III into confessing his crime so they could record it for the CDA Agents.
Finally, it is seen in the ending as the place where Boo’s door is kept.