A Steam Machine is just Linux and Steam, with some UI differences.

Games aren't being developed to run on Steam Machines. They're being made Linux compatible, and incidentally that makes them run on Steam Machines.

Bad in what way(s) in particular?

Steam is just as bad as the Microsoft store is what it boils down too. Centralized control over games you've paid for. It doesn't matter who it is, it's not good.

Not for Valve.

Not for users either. It's by far less locked down than Windows, as it's pretty much just Debian with Steam pre-installed.

Locked is locked.