Simulation of IoT based systems in Software
There are tools to simulate Arduino, but it's not meant for anything beyond basic (i.e. simple circuit). Support is limited, you can't just simulate any and every sensor and shields (e.g. LAN, Wireless). Furthermore, ESP8266 is so cheap that hardly anybody has actual use-case to simulate them. I suggest you work on a real device =)

If you need to simulate data stream into your cloud or IoT platform, I suggest you just spin up a machine and run some code to generate data.