Most artificial life simulators either operate on abstract substrates disconnected from physical reality, or simulate physically grounded worlds that do not scale to the population sizes required for open-ended evolution. We present Microcosmos, a simulation engine in which artificial lifeforms are modeled as elastic filament chains inhabiting a two-dimensional viscous fluid world, designed from the ground up for modern GPU hardware and end-to-end differentiable simulation. We validate the engine through four experiments. Hand-designed locomotion strategies confirm that the fluid coupling respects known physical constraints. Gradient-based optimization of filament folding demonstrates both the full differentiability of the simulator and the expressivity of the filament encodings. Neuroevolution and quality-diversity search produce a wide range of swimming and chemotaxis behaviors automatically. Linear scaling with particle count confirms the engine supports large-scale simulation. Microcosmos is released as an open platform with the long-term goal of supporting large-scale open-ended evolutionary simulations, designed to be physically plausible and computationally scalable.