According to "The Matrix," the world as experienced by most of its inhabitants is indeed virtual. Here's a breakdown based on the movie's plot:

The Matrix is depicted as an elaborate computer-generated dream world, built to keep the human population under control while their bodies are used as an energy source by machines.Reality: Outside of this virtual world, the actual physical world is a dystopian landscape where machines have taken over, and humans are either enslaved in pods or living in Zion, the last human city.The Red Pill/Blue Pill Choice: Morpheus offers Neo the choice between staying in the blissful ignorance of the virtual world (blue pill) or waking up to the harsh reality of the real world (red pill).Neo's Journey: After choosing the red pill, Neo discovers that his life up to that point was an illusion, a program designed to distract and control humans.Philosophical Underpinnings: The film explores themes of reality, freedom, and the nature of existence, questioning what is real and what is simulation.

So, in the context of "The Matrix," the world as commonly perceived by its inhabitants is virtual, while the "real" world is a much harsher, machine-dominated environment. However, the movie leaves room for philosophical debate by suggesting that even the "real" world might have elements of simulation or control, as hinted in sequels like "The Matrix Reloaded" with concepts like the Architect and multiple Matrix iterations.