Starting from episode 1, I was wondering about this question, but I couldn't find an answer until the latest episode.

Did the human body of Momonga transform itself into his character in the game? If that's the case, his soul should be in this character.

Or is it something similar to SAO in which his original body is still in the "human world", but his soul in the "game world"?

Or could it be that Momonga is with his soul and human body in his own world and sits in front of his computer playing this realistic game?