It's funny - if you look at the most recent steam hardware survey results this new steam machine almost exactly matches the median system - 16gb ram, 8gb vram, 6 physical cores, and the GPU looks like be roughly similar in perf to a 3060 too.
Half Life 2 recently got a dev commentary track where Valve reflected on their decisions from 20 years ago. One of the things that stuck out to me was that, apparently, Valve called up Microsoft and said "Hey, what percentage of desktops have DirectX 8 compatible graphics cards?" and Microsoft had no idea.
And thus the Steam Hardware Survey was born. The specs automatically sounded a bit anemic to me, too, but seeing them placed on the hardware survey I don't think they're making an outright mistake, per se.
On the other other hand, the average system in that survey presumably cost more than what the Steam Machine will retail for, if we're correct in interpreting this as being a competitor to dedicated consoles.
But even if it's double the price of the PS5/Xbox, it's still likely to be less than the price (at the time of purchase) of the mean PC in the hardware survey. For every gamer out there struggling along on a $500 mini-PC, there's another who plunked down $5,000 to play Cookie Clicker at 8K/240 FPS.
It might be easy to forget, but most gamers are not using the higher-end hardware that enthusiast discussions tend to focus on.
https://store.steampowered.com/hwsurvey
Perhaps an 8GB limit will encourage game studios to allow more time for optimization, which seems to have fallen out of fashion in recent years.
I imagine this will also help keep the price down, which is always nice.