After commenting i looked up the actual capabilities of the port and it turns out while the port is officially only HDMI 2.0 it actually still supports 120Hz, HDR and VRR anyway. So basically it only doesn't support Display Stream Compression for 144Hz and beyond.
I quickly tested this by connecting my PC running Linux with a RX 6800 to my TV (LG C4). 120Hz, VRR and HDR were all available.
Yeah I have tried it for myself. I am limited to 4K60 when using the HDMI 2.0 port on either my M1 Mac mini or M1 Pro MacBook Pro and LG B2 TV. I do get 4K120 with VRR with newer Macs with HDMI 2.1 as well as my Xbox Series X. It has been my understanding that 4K120 with HDR and VRR requires HDMI 2.1, which is why those HDMI 2.0 limited systems don’t work. Not having a Steam Machine myself, I would assume its HDMI 2.0 port would be similarly limited.
Edit: I should add, I do get 4K120 VRR and HDR on the M1 Macs when connected to a monitor via Thunderbolt or Thunderbolt to DisplayPort adapter, and I would expect a Steam Machine to be similar using DisplayPort, but my TV only has HDMI input and so can’t work in this mode (and a Thunderbolt to HDMI adapter doesn’t work either).
I get 4k120Hz when connecting the output from a HDMI 2.0 port on my laptop to the HDMI 2.1 port on my TV (Sony TV, it has 4 HDMI ports, but for some reason only ports 3 and 4 support HDMI 2.1, 120Hz, VRR).
I quickly tested this by connecting my PC running Linux with a RX 6800 to my TV (LG C4). 120Hz, VRR and HDR were all available.