There are a growing number of games which are using Steam for DRM purposes. These games are, once installed, tied directly to Steam and not your computer. The pro to this is that you can play said game on ANY computer with Steam installed using your account. Games also update themselves automatically. The con is that is that Steam has to be running for the game to play, althought offline mode exists.
The other definitons are outdated and don't represent the improvements Steam has made over the years.
2. Noun. An excellent idea that manifested itself in an extremely buggy and sometimes stupid program. Automatic patching? Great! A friends network? Why didn't they think of that before? A program slower than a sloth? Not good.
2. Steam took too long to update itself, so the uber-1337 WON veteran Jimmy smashed his computer, before realising that he could just shut down steam and play Counter-Striike 1.5
Why does Friends Network work only about 25% of the time?
e.g. Steam, Windows 9x, Warcraft 3 beta, Star Wars: Galaxies
P.S. Satertek STFU with your double definitions