According to a Valve Engineer, the Steam Machine specs outclass the most common PC configurations. The company relied on its own hardware surveys to choose the system’s components. Even as an entry-level option, Valve claims that 4K/60 fps performance is realistic, despite a memory-limited GPU.
They focus on the low end, but a lot of people who only want low end GPUs care about Minecraft, and their OpenGL performance is abysmal, so Minecraft runs like molasses. If you play a lot of Minecraft, Nvidia’s cards manage to be much better value. There’s no reason why this couldn’t be fixed if they’re willing to invest in writing native OpenGL drivers instead of going through a compatibility player or mitigated if they invested more in making the compatibility layer faster, but that would mean deciding they’re losing a lot of sales this way, as it wouldn’t be cheap.