In these lectures, we discuss theoretical aspects of analogue quantum simulation, focussing on ultracold atoms in optical lattices as a specific example. We touch on the motivation for quantum simulation, before going into detail on the first-principles microscopic understanding of the system that allows us to use ultracold atoms as quantum simulators. This level of understanding and control crucially also exists for the dominant dissipative processes in experiments. We conclude by discussing the verification of quantum simulators, comparison with classical simulations, and the current role of many-body entanglement in this discussion.