Never heard of Steam before.
On the short end of it, it's a distribution method for games. It's very platform specific to Windows. Valve cops out on proper Linux support and defers support to the Cedega team.
On the long of it. I'm not particularly fond of it since it encourages the developers to releases patches for their games without actually thoroughly testing them first. They have the ability to recall the patches, but that's a headache in and of itself.
It's also considered a platform that "standardizes" a game interface to the PC, and by extension allows the developers to integrate a more tightly controlled system of DRM. Just a HUGE line of ---smurf-poop--- set forth by Valve (same company that tried to create
PowerPlay, a cancerous still birth.) in an attempt to entice developers to use Steam. With an effective online component in most games, it's not really necessary to integrate DRM... but that's another argument in and of itself for another time.
The biggest (and most obvious) advantage is it effectively cuts out the middle man... actually that's not entirely true. Steam cuts out the game publisher and places that responsibility onto Valve itself (which is also another argument entirely). This results in lower publishing costs and surprisingly encourages small time developers to distribute and "publish" their games and get money for it. I did a cost analyses for Steam in the early years and the money Valve takes in on a per-title basis is substantial. I'll need to refer to my notes but from what I recall, initial claims from Valve is that a typical developer only gets about 40% of the cost of a title. Under Steam, the developer get 100% of the cost of the title less networking costs (prompting initial concerns on early work by Valve to leverage P2P technologies on Steam).
I don't recall what costs are for small developers like World of Goo. Last contract I saw was a 50/50 split but I understand those numbers are negotiable. That was some time ago though.