Hello all, I'm new to the forum and microprocessors so forgive me if this seems like an odd question but is there such a thing as a software simulator where you can test your projects without having to physically assemble the components? Surely its not that hard to simulate the behaviour of simple electronic circuits and components. I was wondering why such a facility hasn't been produced to assist in prototyping and feasibility studies. Surely big manufacturers use something like this all the time?
Sure, such a thing exists, if you're willing to pay for it - then learn it.
What you're looking for is called SPICE simulation; for many analog designs (no microcontroller involved), the "hobbyist" (and professional to an extent) standard is a program put out by Linear Technology called LTSpice - http://www.linear.com/designtools/software/?gclid=CKup5rbys6oCFRJ6gwodqQ3K9Q#LTspice
For anything else (ie, for incorporating digital design and such) - you're either going to find a hodgepodge of various tools, or you're going to have to spend some money (in some cases, a LOT of money).
As far as your assertion, though, that simulating components is "easy" - not by a mile. Digital systems can be fairly easy to simulate, of course - but once you start wanting to properly simulate analog components or design elements (and in real life, all circuits are analog) - a lot of math comes into play.
Finally - realize that a simulation is no substitute for the actual circuit; you can have a simulation of a circuit run "perfectly" in the simulator, but in real life fail miserably - the reverse can also be true as well. Simulations are best for sanity checking a design, but they shouldn't be relied upon as the "final" design. Only an actual prototype (which, depending on the needs of the circuit, might actually have to be built on a routed PCB - but most designs can be breadboarded or otherwise assembled without going to that extreme), tested and probed with actual test equipment - will tell you whether it really works.
There isn't any easy way around a true "smoke test", unfortunately...