One of the things I've noted for a while is that PC gaming as a platform seems to be polarizing between high and low spec, especially if you look outside of North America/Western Europe to places like South America or SE Asia. The steam deck and now this seem to be a reference/target platform for the low spec group. It might not be able to play the prestigious high spec titles well if at all, but so long as "your mileage may vary" is messaged well I can't see it being a problem, it hasn't so far.
There's a certain category of person who spends thousands of dollars seemingly just to see bigger numbers in benchmarks and to flex their consumerism on people. I've seen quite a lot of commenting about how certain games are "unplayable" on the steam deck, games which I have been playing just fine. I just turn the settings down to low and enjoy the game.
The main appeal of a console (for both consumers and developers) is that's it's a "stupid" and "fixed" device. Your game either runs well on it or it doesn't, but you can always count on this remaining consistent prior to shipping it.
If Steam Machine gains enough foothold, it will be treated like a console. It won't run the latest title in 4K@120, but the title will still run great on default settings.
Honestly I'm hoping the steam machine is gonna put some pressure on game devs to knock it off with the absurdly high spec requirements. There's plenty of modern titles that require a top of the line card that don't look any better than 10yr old games.