If I interpret the wiki correctly, it is only takes effect when removing groups. If you remove a group and some of those packages are dependencies of another installed package, you get an error. The -u or --unneeded flag strikes those needed packages from the list and removes only the unneeded ones.

Edit: I just looked at the man page for pacman. There appear to be other usages besides groups. It probably does the same as with groups just with explicitly stated packages.

-u, --unneeded

Removes targets that are not required by any other packages. This is mostly useful when removing a group without using the -c option, to avoid breaking any dependencies.

No, because the steam package is only the launcher, which downloads steam to the user’s home directory most times it’s either ~/.local/share/steam or ~/.steam