Good Morning Boleyd
It is, essentially, both... Considering that it's sold to home users rather than businesses, it's essentially a 'game'. That doesn't preclude it from also being a simulator as well
Trainz caters, quite well these days, for both a casual 'gamer', and as a simulator for railway enthusiasts, and anyone in between. A good example can be said to be the difference between DCC and CAB mode, if you are looking at the simulation of train physics. OTOH, if you're looking at the simulation of operations on a network, cab mode is more 'game' like and DCC performs better as a 'simulation' (since the 'simulation' you want isn't for driving the train, but just the operations). Remembering that AI uses DCC, not CAB mode
That said, we are constantly improving aspects of both sides, and we feel we're finding a middle ground on this.
There are limits to how far Trainz goes on both sides, but a look at what some creators have achieved and I think it is still very much a simulator...
Overall though, Trainz really can be what you want it to be

And I don't think we've found the limits of many areas of what can be achieved with Trainz. Both graphically, and in terms of 'gameplay'/operation. Actually, taking some things closer to 'gameplay' (e.g. more appropriate messages in a driver session, that sort of thing) can help better represent 'simulation' of railway operations as well...
Regards