Right. For those of you who don't know, Steam is VALVE's (You know, the Half-Life people) shiny toy, created in order to make multiplaying, updating, buying, finding, and loads of other game things much easier. With Steam, there is no longer and waiting in a queue at FilePlanet for a 90mb patch, instead it just works when VALVe says it does (trickle update, you download the patch before it is 'released' then you get switched over automatically).
Servers have a similar idea, they just update. You don't even have to know there is a new version out. The Ready-To-Go games are great as well. Start playing Half-Life single player on any PC with Steam installed by logging in, downloading about 50mb, and you're away. The rest of the game is downloaded as needed.
Looking for a new game? If it's available on Steam, double click it's icon and up pops a screen. Enter an existing serial code (Half-Life, for example) or buy the game totally online. Steam checks to make sure nobody else has ripped your code, then ties it to your account to make absolutely sure that your copy registered to you.
Still, some people hate Steam. Why? Most of the dislike of Steam originates from the version 2.0 public release, the first fully official (non-beta) release.
2.0 was horrible, to put it nicely. Ticket errors, crashes, slowdowns, network congestion, you name it and Steam had it. True, a lot of it was caused by 500,000 people all trying to download 700mb worth of data at once, but still the client was horrible. And it wasn't helped by people running it on machines far below the minimum spec.
Still, after a reinstall or two, and when the chaos had calmed down, you could actually get hold of what you wanted and all worked well(ish). The releases of pre-cached copies (with all the game files included) helped the system along. Then came the first update. More chaos, since the update was fixing part of the update code which caused the platform to update really badly (Got that? Good.). However, when everbody had that patch the whole network started ticking over much, much better. If your PC was above the specs (as any gaming machine should be, they're not that high) and you had a decent connection (56kb was the slowest you could realistically cope with) all was good, you could get games and updates, and even do clever stuff with Friends.
The vast majority of Steam bugs are ironed out, yet it has aquired an undeserved stigma. New users should find it very nice apart from a couple of unintuitive nasty bits.
Friends, what a wonderful invention. Think of MSN, integrated with the multiplayer game of your choice, the server browser, and some minigames.
Friends is probably the best bit of Steam after the content distribution bit. Friends allows you to add other players (clan members, friends, anyone who accepts your request) and then chat to them. This would normally be nothing special, MSN does it quite well. No, the fancy bit about Steam's Friends is that it can see where they are. Not a mere online/offline, but Steam can tell you which server they are on, playing what game, how long they've been there, and then join you to the server. Beat that MSN.
On top of this rather cool feature are the minigames, such as chess and draughts, which are great for passing the time between rounds in Counter-Strike. So overall, a very useful piece of kit.
It is worth noting, however, that Friends is notorious for not working or randomly logging people out. This is slowly improving, but to be honest I would stick with 3rd-party IM for organising games.
Steam, along with the nice game updating, has also aquired the ability for people to preload games, and even buy them through Steam. Suddenly, CDs become a bit unnecessary. Half-Life 2 prior to release was preloaded by over 50,000 people. Instantanious playing as soon as you add a CD key to your Steam account, or alternatively use your credit card (sadly no debit cards yet) to buy the game online.
So, Steam was hated by pretty much everbody in the beginning. But now, a few patches down the line, it is an incredibly useful tool for not only playing games, but also updating them, piracy control, and even getting hold of the games. New cache filesystems and Ready-To-Play mean that you can start gaming from a clean install relatively quickly (The machine I'm writing this on has never seen a Half-Life CD or CDKEY, it was all downloaded and the key was tied to my account on my old machine).
Final words, well done VALVe for sticking with it and making it work, well done to the believers who stuck with it and aren't obsessed with WON, and well done to the content hosts who let us download 700mb worth of stuff on a regular basis.