Apple's support for making apps on older macs is rather unfortunate. The official line from Apple at the moment is "Starting April, 2020, all iPhone and iPad apps submitted to the App Store will need to be built with the iOS 13 SDK or later." So as of April the minimum version will basically be Xcode 11.
As for simulator support the restriction is Webassembly (WASM) support. There's several components in the C3 runtime that require WASM to work, such as the audio decoder and the physics behaviour. All physical iOS devices do support WASM, but for some unexplained reason it is disabled in the iOS simulator.
If you are not using features that require WASM, the project can be modified to remove the check... but things are likely to break if they do need it ( for instance if you have audio the project will not load ). In general we advise that you should test on a physical device anyway, so most of the time it's not worth the effort.
The C2 runtime does not have the WASM requirement so works in the Simulator, but you are obviously missing out on a fair amount of features which are only available in the C3 runtime.