Are bicycling on a cyclo-simulator "bad" for you?

Your seat setup needs to be looked at. I regularly ride indoors on rollers, which make it much more difficult to get out of the saddle. I have been riding long distances for over 30 years and have suffered no damage. have your bike properly fitted, and try doing some 30 second out of saddle efforts, at least every 5 minutes.

Most commonly, I've seen people use a trainer without leveling the bike. That has the effect of lowering the handlebars and pointing the saddle's nose down, which may cause the rider to slide forward onto the nose too far. Level the bike, then see if you're sitting on the saddle where your sitz bones are supported, or not. Numbness is a bad sign and shouldn't be ignored.

NO

yes! you must not have it set up properly i've been using an indoor trainer for many yrs never had that kind of problem. do you have the front up too high or too low? this would push nose of saddle up toward groin or too low you will slide forward onto nose of saddle.

You need to make sure your saddle is adjusted properly. Try tilting the nose of the saddle down just a little so you are sitting more on the pelvic bones.

Check your bike setup, specifically nose angle and seat height. Riding indoors shouldn't be any different than outdoors as far as wear and tear on the naughty bits.

I go for a couple hours when I'm stuck indoors, and it hasn't caused any problems.

Yes.