I think Aionios is a simulation, and each character has a "real world" counterpart.
The vats in Aionios containing the soldiers are "avatar" bodies that are inhabited once the "real world" person is "inserted" into it (by choice? Probably not)
Once a soldier dies, its "avatar" body disintegrates, the life force of which is absorbed into the "computer" of Aionios (........Aion), and the soldier "wakes up" in the real world..... maybe?
Or, if they die in Aionios they die in real life, and the "ultimate honor" of living through your 10 Terms and getting personally seen off by Melia / Nia is the way to return back to the real world unharmed.
All this would imply that Noah and Mio's military role of "off-seer" means that they play some part in the "fueling" of Aion using the spent avatars of fallen soldiers
Yeah, The role of the off seer is DEFINITELY about fueling. It's a very similar vibe to 'returning to the bionis', and as such instantly distrusted to me.
That is technically what's already been happening in Xenoblade 1 and 2, although without vats and stuff.
In order for the reality machine to function, and not just, randomly, blindly, edit reality, like.... A static screen all willy nilly, (like it's first activation) it needs to be calibrated, it needs to be provided an accurate up to date digital representation of what it's working on in the real world, to include every atom, chemical and electrical state of each and every brain of every creature, as well as the environment, and they need to be lined up exactly. Storing cd image rip equivalents of brains is how Shulk was able to exist after death, and how Alvis was able to instantly bring back representations of the party to help persuade Shulk to make a new universe.
The memory space of the machine could absolutely be made to do that. Provided it had power to function.
Not sure how we would provide fuel through a virtual world though. As far as I can figure, fuel would need to be provided from the real world to power the virtual world. Maybe that's what the bodies in vays in the real world are doing when their virtual counterparts are filling the clocks?
Although keeping a baseline of power to the machines memory could be really important. It has data of practically every state if the old world's that could be used to fix everything, provided the machine ever regained access to a power source that could make it functional again.
Although it would need someone who understood how to use it, at a computer operator level. Something I don't think even Shulk understood, comprehended, or really was cognizant of.
But.... Both halves of Zanza/Klaus's brain data would still be in memory, as long as power was never lost. Meyneth too.