Simulating a power system with both transmission and distribution networks modeled is a challenging task. On the one hand, it is difficult to set up equivalents restituting the dynamic behavior of aggregated loads and distributed generation units. On the other hand, representing all distribution networks in detail is computationally very demanding. In this paper, the combination of a domain-decomposition approach with the exploitation of the localized nature of power system responses to disturbances is proposed. Distribution networks marginally participating to the system dynamics are automatically replaced by simple models, while the others are simulated with full detail, thereby preserving simulation accuracy.