What are limitations of visually simulating/prototyping microcontrollers?
The biggest limitation is that you'll spend more time building the simulation than it would take to build the circuit. Simulations are great for answering specific questions, but the effort to produce them grows quickly with level of detail, and they can never model all the intricacies of the real world. If you are trying to answer a question that doesn't involve conditions that are difficult or dangerous to create and measure, then it's almost always easier to measure real hardware.

If you have a specific application in mind, then you can often just model the essence of the problem. That is, model the dynamics of the plant, the algorithms you are using, and the latency of your computation. Frameworks like Simulink are great for this.

By trying to create a general purpose virtual breadboard-y simulation, you start down a deep rabbit hole. Does the sim need to model...


...the latency between an interrupt signal and starting the ISR?
...bus arbitration between modules inside the controller?
...the electrical behavior of the output drivers of the pins?
...the difference in power consumption of each instruction?
...propagation delay in transmission lines?
...multiple systems on independent clocks?
Does the simulation need to run in real time?


Depending on the problem, the answer could be yes or no to any of those questions. Trying to generalize the simulation design beyond your actual requirements means a lot of extra work with no engineering benefit, and can actually hurt your simulation's accuracy where it counts.