Exactly. The song appears to be in the words of a character in the story, an observer rather than an omniscient narrator. He's just tossing out ideas (another one being "plays by intuition") because he himself doesn't know.
How and where exactly into the story does "Sally Simpson" fit? In the album and the film (don't know about the stage version) they're sequenced in different places, though we do know for sure that it's after Tommy gains all of his followers and before he opens his holiday camp. Additionally, it is mentioned that Tommy "always talks about the day" of the events that occur in the song...but, then, that line probably isn't even something that matters much in the context of the larger story.
Sally Simpson was originally just about a girl who leapt onstage to touch a rock star; it was adapted to Tommy later.
They have to have some way of going to show how intense and out-of-control things are starting to get. Simpson is basically the first pebble of the avalanche.
Why is Elton John always credited as "the Pinball Wizard"? TOMMY was the pinball wizard! Elton was the Champ.
I think it's generally assumed by most people that the Pinball Wizard is the character's name.
Exactly. Actually, Elton's character is officially credited as the "Local Lad." Since his character's name is never outright said or even mentioned by anyone (it's not that important to the plot anyway) and he's the one singing the Blacksheep Hit of the same name...
That and the name "Pinball Wizard" just seems more memorable than just "Local Lad" or "The Champ."
Technically, Elton's character could be considered the pinball wizard up until Tommy ultimately defeats him. After all, he's officially called the Local Lad yet his other nicknames include Bally-Table King and The Champ, so who's to say that one of them wasn't also "Pinball Wizard"? Tina Turner's character is referred to as the Acid Queen, the Gypsy and the Gypsy Queen, so why can't Elton's character have multiple nicknames?
If it helps, this troper has seen a stage version where the program billed them (yeah, this version had two for some reason) as both the Local Lad(s) and the Pinball Lad(s), so it seems possible that this character could have multiple nicknames.