In my humble opinion, things somehow went like that :
1) A worldwide net is created to rule transports, energy, economics, and so on. It's called Netsphere.
2) Of course, Netsphere needs to be protected from hackers. Only authorized people can connect (prior Rule Bureau's people) : they must have a netgenes terminal, with a registered DNA code. To prevent hacking, Safeguards is created : a software (some avatars that slay hackers' avatars, that is) which hunts unregistered people who try to access the Netsphere.
3) The tragedy of the net occurs. The link between "basic reality" and the Netsphere is broken ; no-one can connect(perhaps because of the virus, which alters the DNA code). Even the Rule Bureau can't fix this problem.
By the way, the Safeguard software must have been hacked, so Safeguards are downloaded into the "basic reality". Of course, they kill anyone who doesn't have registered genes (netgenes terminal).
4) Much later, the Rule Bureau is still trying to fix the problem. Some agents search for uninfected people. But even if someone isn't infected, he can't connect, because since centuries, generation after generation, DNA has changed. So the agents seek ancient DNA (which is like the DNA from the Netsphere era). That's why the child found by Killy at the beginning isn't a solution ; but with this child, engineers can try to refind ancient DNA, and eventually try to create a DNA code which seems to be a registered one (in the Safeguards' eyes).
So how can one tell the real world and the fictional one in this saga of blame it all is portrayed as real I do not see the net. PLease explain sorry for my ignorance?