Read the Postulates first. Specifically relevant is the assumption that the Matrix follows the real world as closely as possible, down to the atomic level. This answers Mouse's question about the taste of chicken. The machines do not need to know on a meta-level what things taste like, they simply have a simulation so deep that chemical reactions and human interpretation of them take care of itself. The passage of time is considered immutable too, since any shift would be noticed outside the Matrix. Anytime we see time-related effects, they are simply that, effects for the viewer not absolute frames of reference.

One place that we believe the Matrix differs from the real world is in the area of quantum electrodynamics (QED). The fact that the Matrix can be represented entirely by discrete elements of code demonstrate there isn't quantum uncertainty at work. A Deterministic view (everything cause-effect) was the deepest level of physics before QED came along, so it is sufficiently robust to encompass the Matrix, the missing QED far beyond human experience (however, it could explain the Splinter). A Deterministic universe would also explain the infallible nature of the Oracle's prophecies.

Objections

This is counter-intuitive to many people who want to think of the Matrix as a computer program- which it is, but more robust then they think- with everything being meta-elements... for example, the taste of chicken needs to be programed in. This was already addressed above. Another protest is that they couldn't possibly process that much information. Perhaps. The only thing we can say is that using particles and physical laws is more pragmatic than trying to reverse simulate every aspect of reality. Finally, is the view that the Matrix can't be Deterministic and that the Oracle is fallible. If the Oracle is wrong at some point, we'll adjust our view, otherwise read up on what Determinism means.