That thing is going to run a ton of games that other consoles don't.
Few customers are going to replace their PC with it, but if you have the cash and want to add a sleek console to your living room that will also stream from your desktop in a pinch, it's probably a great deal.
???
Look at steam top 100, sure there are 2 or 3 games you wont be able to play on there, but there rest work just fine. And sure there are popular games outside steam, but even if none of them worked (which is not true), for most gamers its a non issue. (And Valve is probably not really concerned about them)
The only games this limits are online competitive (most of the time FPS) games. There are plenty of gamers, myself included, that have 0 interest in such games.
In short even if 0 online FPS games are playable on steam console(which is not true), there are still 10s of millions of gamers, who wouldn't care.
As far as why wouldn't people pick something that can play 100% of games is because they cant. Even the best PC cant play Nintendo games, not all PS games are on PC or xbox, etc. You always have a trade off. And plenty of people still buy PC's,Deck, PS5's and Switch consoles.
My guess id more people won't buy it because, they want better specs, not because a few games wont work on them.
But that still leaves millions, potentially tens of millions of people.
Is it you, or is it the children? No, it's definitely the children who are wrong.
Sony's in trouble; their crown jewels are all on PC right now! You can buy a Steam Machine next year and play all the Spider-Mensch, the Lost Hose, the Ghouls of Yo-Kai!
It's almost certain no one bought a Steam Deck primarily to play DotA, and it remains to be seen if any has a meaningful impact on the Steam Machine, but I doubt it.
Why would I want to limit my options for occasional AAA gaming to the graphics supported by a particular console, when I can spring for GeForce Ultimate for a month and play BF6 with amazing graphics at 120 FPS, on my TV or my laptop, or my iPad or my phone? And play with even better graphics two years from now, as the state of the art advances.
Sure a different option would likely be best for people who know they want to play AAA, all the time. Although, even for many of these people, the Steam machine is probably a great second box for many, that gets you however many 100s or 1000s of titles they have in their Steam library.
But a fear based "you might miss out occasionally" argument is unpersuasive. Especially in a world where some games are exclusive. My swanky new PlayStation is no help if everyone is raving about the new Nintendo game.
As a gamer, why would you want to spend a few hundred bucks on a gaming box, when it isn't able to play the biggest hits? Who would want to deliberately limit their ecosystem to indie games?
There's a nonzero chance that BF6/GTA6/etc becomes a thing that everyone wants to play. If all your friends are raging about how much fun it is and are all playing together, aren't you going to regret buying a Steam Machine?
Sure, you can still play Super Meat Boy, but that doesn't matter - they regret what they can't do.