From: My Own Private Hell
It's a digital platform for buying games.
Pros: Download anything you have purchased to any PC, anywhere. Games go on sale constantly, often at incredibly low prices (this is determined by the developer/publisher of said game, not Steam). Automatic updating, in-game browser+chat+screenshots+yadda, overall a very solid service.
Cons: Your games are tied to your account forever and most require Steam to be running for them to launch (but not always online).
Many people seem to have an irrational hatred of Steam, I've never had a single problem with it. I like the Matrix setup as well though, nice automatic patches and just a serial code as DRM, really nice.
You seem to have forgotten to mention that the game saves are messed about, worse one for me was X3, due to the way Steam runs and whether or not the game was released before it was on Steam the games code needs to be changed, in the X3 case folks had lost a lot of time they had put into the game.
Try doing a Google search with - "Steam + broken game saves" that shows a few of the problems.