The distinction can be described in a chronological way. Theory is a process where we are trying to come up with a mathematical formulation to describe a system. Once we know it agrees with the experimental results the theoretical work is done. simulation enters after this in the picture. It is a process where we apply the theoretical model to different conditions and try to predict an outcome that can be tested experimentally.

The reason probably lies with the view that since there is no experiment involved that person is doing theoretical work, as many people consider only two aspects primary, theory and experiment.