I can only speculate Valve's reasoning, but there are a very select few games that require actual case folding and not the simulated case folding that wine offers. I know of literally only one.
SteamOS dev here - lack of case folding is one (but solvable, we supported development on native case folding for ext4), but general stability issues are the main concern. Our testing with btrfs has not been promising for deploying it in a zero-maintenance manner to many users and finnicky SD cards and have it Just Work, but we're keeping an eye on things and weighing where we could contribute.
Have you done any performance testing with btrfs compression?
I have a Legion Go. I don't have the specs handy now, but the SSD was rated fast enough that I suspected compression would harm my overall performance.
It's a file system feature, all it means to be case folding is that capital and non-capital letters are treated the same, as NTFS does.
All Linux filesystems will by default allow "TEST" and "test" and "Test" to exist in the same folder, which no Windows application is ever intended to handle. Wine works around this by default.
