In simulation mode CD writing recording is only simulated, i.e. the entire write recording process is performed but the write recording laser is not activated, so that no data is actually written to the CD. This mode enables you to test your system configuration and localize errors without unnecessarily producing unusable CDs.
Make sure that simulation mode is activated when you make your first recording and watch what happens, keeping an eye on the level of the Write Buffer display at the bottom of the dialog box. If the display frequently drops down into the red zone at the left hand end of the bar you should probably reduce the write speed when you actually record the CD. You should also do a test like this if you plan to use your computer for other tasks (for example downloading files from the Internet) while writing CDs. Start the write simulation and then keep an eye on the write cache display while you are starting your other applications and working with them.
See Recording Audio CDs and Configuration and Settings.