Subvolumes and such require a kernel to be loaded in order to use, so that's why the base device partitions don't run that way.

That's a great point I never thought about. I really wondered why they wouldn't go with btrfs subvolumes, since they could easily btrfs send and receive subvols like they do now with whole partitions. Subvols would even have the benefit of less space needed since many files probably stay the same between updates.

My guess was that the update mechanism used doesn't support btrfs, though after a quick search on the rauc github it might actually support it.

steamos-teardown is a great project to learn more about SteamOS, btw. https://github.com/77Z/steamos-teardown