They have a manual review step when you submit a game. Although you're right that they can't catch everything, they can certainly catch obvious things.
I'm sure they mostly just don't want to wind up in court with a lawyer being able to say that they let [blatant example here] get published on their store. So long as they can credibly claim that there was no way for them to tell something was in an objectionable category, I'd imagine they're fine with it.
I doubt their manual review actually does much of anything. There are already tons of "games" that don't actually function that are just pre-built engine assets shoved together.
I wonder how automated their system is. They obviously wouldn't boot the game up and start walking around because they can just extract the media files and check. But I'm curious if there is a system that identifies copyrighted images/video stills and searches for copyrighted words.
I'm sure they mostly just don't want to wind up in court with a lawyer being able to say that they let [blatant example here] get published on their store. So long as they can credibly claim that there was no way for them to tell something was in an objectionable category, I'd imagine they're fine with it.
Their rules, if you're curious: https://partner.steamgames.com/steamdirect