How they do it is by shipping a franken-ubuntu14 as the "steam runtime" for native Linux games. Not a terrible solution but not exactly ideal for general purpose software where games mostly keep to themselves. Their work on Proton is amazing though.
- Steam Runtime: A set of common libraries Linux native games target for multi-distro compatibility, I believe this still uses Ubuntu as the upstream
- Steam OS: An arch based distro pre-configured to run Steam out of the box, used by the Steam Deck, comes with extra stuff like gamescope to smooth over various issues other distros have with VRR, HDR, etc.
- Proton: Runs Windows games on Linux