Steam Frame is going to have a snapdragon processor and will "be a computer".

So there will be an ARM native Steam client (and Steam OS that may or may not be SteamOS). Just a question on whether that gets a wider release.

But yes. Games themselves will be heavily dependent on FEX.

Eh, if they're doing it for Half Life Alyx, it'll likely work like Proton, where Steam will automatically install a native version if it's available, and you can "force a compatibility tool" if you'd prefer to run the original version through FEX. Presumably any dev would be able to upload a native ARM version for Steam Frame/a hypothetical Steam Deck 2, but I imagine very few will.

Edit: Valve engineers pretty much confirmed this to Gamer's Nexus, as they described Steam automatically installing the best version for your device, and that you can manually override that.

Honestly these days the list of things you can't easily compile natively for ARM is getting pretty scarce. It's actually kind of surprising to me that there would even be a significant need for an emulation layer, versus just working directly on compiler and runtime support directly.

FEX will have a performance penalty for CPU bound games (not for graphics if it supports Vulkan (yay passthrough)) so native is better