The Machine Matrix
In the distant past, before war had destroyed the surface of the Earth, the Machines fled the civilization of humanity to found their own city called Zero One.
After the human race was defeated by the machines of Zero One, the machines performed experiments using cybernetic implants to connect human minds to a virtual reality called the Matrix.
A research program was created to find a stable simulation for the humans.
Version 1
The first matrix I designed was quite naturally perfect. It was a work of art. Flawless. Sublime. A triumph only equaled by its monumental failure.
The first version of the Matrix humans were hardwired into was designed as a perfect world, with no wars, plagues, or dangers of any sort. People, due to human nature, began to reject this simulated utopian reality. The human psyche could not deal with perfection. This rejection caused entire crops of humans to die.
Version 2
Instead of the perfection of the first, the second version of the Matrix simulated a world more in line with the varying grotesqueries of human nature, with wars, plagues and more hellish environments. This was caused by natural human anxieties warping the simulation and allowing deep-rooted fears to manifest. It has been alluded to by pre-version three programs like supernatural programs, which are remnants of this era of the Matrix.
Much to my frustration, this version was also a failure.
Version 3
Created in the same era as the first matrix this project also followed the philosophy that humans would be happy living in simpler times, and I attempted to to replicate a medieval Asian setting. Once the first matrix failed, this project was abandoned. The creation of a third version was suspended until a way of dealing with mankind's unpredictable nature could be found.
A program, which you humans call the Oracle stumbled upon a solution whereby nearly ninety-nine percent of the test subjects accepted the program provided they were given a choice - even if they were only aware of it at a near-unconscious level. While this solution worked, it was fundamentally flawed, creating the otherwise contradictory systemic anomaly, which despite my sincerest efforts I have been unable to eliminate from what is otherwise a harmony of mathematical precision. If left unchecked it might threaten the system itself. Ergo, those who refused the program, while a minority, would constitute an escalating probability of disaster. While it remains a burden assiduously avoided, it is not unexpected, and thus not beyond a measure of control.
The virtual reality world simulated by the Matrix consists primarily of a vast unnamed megacity which resembles human civilization around the turn of the 21st century (This time period was chosen because it is supposedly the pinnacle of human civilization). As this environment is practically indistinguishable from reality, the majority of humans connected to the Matrix are unaware of its true nature.
Version 4
After Neo secured a truce with the Machines a fourth version of the Matrix was created, in which any bluepill who wishes to leave the Matrix is allowed to do so under the terms of the truce (but only in Richland and new redpills are forbidden to go into restricted areas). After 2 years it was discovered that Zion had been building a new base deeper into the Earth's crust, which was being called 'New Zion'. This was in violation of the truce and therefore it was broken. Further awakenings were not allowed and I had increased Agent activity in restricted areas.