The last few years Valve has made a strong push with Linux gaming. Since the Linux marketshare is still small (I think it hovers around 1% of Steam users), a lot of people wondered why they were doing it. I'm not sure if this is the only thing they are doing, but it appears to be one of the reasons.
One of the reasons that Steam Machines failed is because the games library was limited. This time around, it shouldn't be a problem.
Steam has put a lot of work into
Proton, which is a compatibility layer (it's basically WINE with some extra stuff) that allows Windows games to run on Linux. It includes
DXVK, which lets DirectX games run using Vulkan instead, which is supported by Linux and doesn't come with much of a performance hit. They also contributed to things like mesa (the open-source video driver) to help reduce things like stuttering, particularly on AMD video cards, so it makes sense that they targeted AMD hardware.
So now
Windows game compatibility on Linux is very good. I have about 230 games on Steam, and I think only 20 are unplayable on Linux (about 75 games are native Linux games and the rest run through Proton).
The big issues with compatibilty is DRM, which often fails on Linux, videos that use proprietary codecs, and anti-cheat. If they are pushing this hardware, then it might mean that these issues might be closer to being resolved.
Since it is running Linux, with their Steam OS, that means that this device is a full computer and you can run other software on it.