Soon you would only want to play on closed/invite-only servers, since the guys that "wanted to be nasty" didn't go into their own little corners, but were glad to spoil it for everyone else. And even then the cheaters invested a lot of time and effort to sneak into closed circles to ... I don't know, simply cheat?
Guys just randomly using your key (at a point were Half-Life was really cheap and easy to come by) were also a constant annoyance.
So Valve had to do something, and this was the Steam client, cheat detection, and a constant cat and mouse game to save the experience for players and assets/investments for the developers and in effect their "platform".
Never underestimate the desire of idiots to ruin it for everyone else.