Okay the webtoon left out something rather important.
In the novel the Elf King reveals that the Famtasy World wasn't some simulation but an actual world that the teaching staff carved up like "cheddar" into different dimension fragment things. Every run is through one of those pieces, each trapped in a time loop.
The teaching staff are monstrous hypocrites who've condemned tens of thousands of living beings to be stuck in a loop for letting teenagers fulfill their isekai fantasies while teaching the "heroes" their strange version of morality. (Which is more about the hero being nice and suffering hardship, even if doing so actually causes more suffering(