Good decision by Valve. Considering the sway they have on the industry (if your game can't be on Steam, suddenly you have a lot less exposure), this hands-off stance is the most fair and respectful both to devs and players. We don't need any more "curated app stores" by tech companies that want to be petty tyrants.
It's a smart move for Valve, as only an explicit commitment to principles of neutrality have any hope of shielding them from the ever-growing Culture Wars where various outrage-groups weaponize platform rules to chip away at others' ability to enjoy content on their own terms.
I agree with you, but I think this is a perfect example of a failure to successfully handle branding.
For a long time, Steam was distribution platform where the distributor was also the curator. Granted, this curation mostly resolved to "is this an AAA or someone peripherally in the Big Boys club," but it was a certain level of curation that consumers came to expect.
Now that Steam is the de-facto app store of the PC platform, Valve is strongly incentivized to make sure that any game you can buy, can be bought through Steam.
Combine this with their general unwillingness to scale their employees to match the size of the business they have (which is IMO a silly thing on Valve's part, but I'll avoid this discussion for now), and the shift away from Valve-as-a-curator makes sense.
But Valve hasn't sold this as providing Steam's distribution platform as a back-end service to curators/other "stores", they've sold it as Steam and damaged their own reputation in the process.
There's a reason why large businesses have so many different brands that are hard to associate without a lot of digging, and Valve's handling of Steam is a good example of why.
It's a smart move for Valve, as only an explicit commitment to principles of neutrality have any hope of shielding them from the ever-growing Culture Wars where various outrage-groups weaponize platform rules to chip away at others' ability to enjoy content on their own terms.