The simulator can also work with models that are created using tools like MLCAD, LDCAD etc which are capable of exporting files to LDraw format (*.ldr).
MLCad - MLCAD was at a time the standard for building LEGO models in LDraw format. It is built with aspects of a professional CAD tool, with three orthogonal views and one 3D perspective view.
LDCad - A newer tool than MLCad. It can do most of what MLCad can do, but has the advantage that editing can be done directly in the 3D view, and it has parts snapping. This one is closest to the experience you get in LEGO Digital Designer.