Is it possible to disable the network in iOS Simulator?

Yes. In Xcode, you can go to menu Open Developer Tools → More Developer Tools and download "Additional Tools for Xcode", which will have the Network Link Conditioner.

Using this tool, you can simulate different network scenarios (such as 100% loss, 3G, high-latency DNS, and more) and you can create your own custom ones as well.

Use a simple Faraday cage to block or limit the external RF signal level.

You can make your own with aluminum foil. The openings should be smaller than the wavelength of your data service if that's what you want to block.

• 800 MHz has a 37 cm (14") wavelength
• 1900 MHz has a 16 cm (6") wavelength.

This works better with an actual device than with the simulator since the Mac is hard to work on when inside the Faraday cage ;-)