Going open source also means their contributions can propagate through the whole Linux ecosystem. They want other vendors to use what they're making, because if they do they'll undoubtedly ship Steam.
So it's not something Valve wanted to deal with. They commented on benefits of working with upstream GPU drivers, so it clearly matters.
(Does Valve keep the Steam Deck on a rolling/current Linux kernel? I'm honestly surprised if they do, because that seems like a lot of work and compatibility risk for minimal benefit)
Reasoning for the switch: https://en.wikipedia.org/wiki/SteamOS#Development
> The decision to move from Debian to Arch Linux was based on the different update schedule for these distributions. Debian, geared for server configurations, has its core software update in one large release, with intermediate patches for known bugs and security fixes, while Arch uses a rolling update approach for all parts. Valve found that using Arch's rolling updates as a base would be better suited for the Steam Deck, allowing them to address issues and fixes much faster than Debian would allow. SteamOS itself is not rolling release.
Being a client or even a partner doesn't guarantee good cooperation with Nvidia (Evga has a lot to comment on that). As long as Nvidia is not a good citizen in working with upstream Linux kernel, it's just not worth investing effort in using them for someone like Valve.
Stuff like HDR support or anything the like are major examples why it all matters.
Form factor (console or not) has no bearing on importance of this issue.
I doubt they care to work with valve to release steam deck as much as high end compute market