SteamOS is a fork (derivative) of Debian[www.debian.org] GNU/Linux. The current version (SteamOS 2.0) is called 'brewmaster' and it is based on the Debian 'jessie' (stable 8.x) distribution.
The major changes made in SteamOS are:

• Added various third-party drivers and updated graphics stack
  
• Updated kernel tracking the 4.1 longterm branch
  
• Custom graphics compositor designed to provide a seamless transition between Steam, its games and the SteamOS system overlay
  
• Configured to auto-update from the Valve SteamOS repositories

• Intel or AMD 64-bit capable processor
  
• 4GB or more memory
  
• 250GB or larger disk
  
• NVIDIA, Intel, or AMD graphics card
  
• USB port or DVD drive for installation

All of the base operating system components are open source. The Steam client itself is proprietary, as are some proprietary third party drivers.
http://repo.steampowered.com/steamos
All SteamOS machines are set to auto-update their OS from Valve's public repositories on a regular basis through the standard Debian APT package manager.
SteamOS is designed to run Steam and Steam games. It also provides a desktop mode which can run regular Linux applications. SteamOS makes use of the standard APT package manager for software updates; you can add third-party sources to your subscribed repositories to gain access to more applications. SteamOS currently provides a limited set of packages, but many Debian jessie packages work fine on SteamOS. We plan to make a wider variety of packages vailable directly from the SteamOS repositories over time.
Debian is a particular distribution of the Linux operating system, details about it can be found here[www.debian.org]. Jessie is the current stable release of Debian, which was used as the basis for the SteamOS distribution.
Building on top of the Debian core is the best way for Valve to deliver a fully custom SteamOS experience to our customers.
No, SteamOS is based on Debian GNU/Linux and is not compatibile with Microsoft Windows games and applications. However, SteamOS supports seamlessly streaming your games from your Windows computer; for more information go to this page for more information about Steam In-Home Streaming.
SteamOS currently has two different repositories, "brewmaster" and "brewmaster_beta". "brewmaster_beta" is a testing release where fixes and features will gradually accumulate on a daily or weekly basis. When the beta stabilizes, those fixes will be promoted to the "brewmaster" repository. This process is similar to the existing steam/steam_beta process. Important security updates or critical bugfixes may get pushed directly to "brewmaster" if needed. Currently we are aiming for a rhythm where brewmaster_beta is updated every Monday and brewmaster gets updated on the first Wednesday of the month. We expect this will change over time.

If you want to opt your machine into brewmaster_beta, you can run this command from a terminal session on the desktop: "sudo apt-get install steamos-beta-repo" Now when SteamOS checks for updates, you will get the newer packages from the brewmaster_beta repository. WARNING: there is no easy way to opt out of the beta, you will need to either restore your system partition or wait for "brewmaster" to catch up to the brewmaster_beta!

• Unzip the SteamOSInstaller.zip file to a blank, FAT32-formatted USB stick (MBR, not GPT).
  
• Put the USB stick in your target machine. Boot your machine and tell the BIOS to boot off the stick. (usually something like F8, F11, or F12 will bring up the BIOS boot menu).
  
• Make sure you select the UEFI entry, it may look something like "UEFI: Patriot Memory PMAP"
  
• Pick "Automated Install" from the next menu.
  
• The rest of the installation is unattended and will repartition the drive and install SteamOS.
  
• After installation is complete, the system will reboot and automatically log on and install Steam. At this point an internet connection is required. If you have an internet connection, Steam will automatically install itself. If you do not have an internet connection (for instance, if you need to connect to a WiFi access point) you will get a popup telling you this. Close the popup and you will get the network configuration UI where you can set up your network. Once you are connected to the internet, close this UI and Steam will install itself.
  
• After Steam finishes installing, your system will automatically reboot and create a backup of the system partition.
  
• When the backup completes, select "reboot" to boot into your freshly installed SteamOS

To access the SteamOS desktop, it must be enabled from the Steam Settings menu. Select Settings (the gear icon in the top right) then select Interface and check the "Enable access to the Linux desktop" box. Now the Exit button will have an additional option, "Return to Desktop" that will switch to the SteamOS desktop.

From the desktop, click on the "Return to Steam" icon to switch back to Steam.
SteamOS comes with two predefined accounts. The first is "steam" and it is the account where Steam and all its games run. This is a non-privileged account. The second account is "desktop" and this is where the SteamOS desktop and any non-Steam applications run. This account can use 'sudo' to gain administrative privileges after you set a password for it.

Note that these are SteamOS accounts and are not associated with any Steam Login. Even though you can login multiple Steam users, all those users will currently be sharing the same SteamOS desktop and accounts.
The desktop account can gain root access, but ships with no password. Before you can use this account to gain root access, you need to assign it a password. From the desktop session, start a terminal window and type "passwd". Enter your new password twice. Now you can use the "sudo" command to perform privileged operations.
The standard SteamOS installation includes a recovery partition on the hard drive. You can use this partition to restore the system drive to its original state. Your Steam installation, games, and any desktop changes you have made will be preserved. To use the recovery partition, you will need a keyboard attached to your SteamOS machine. Turn the machine off and back on. Press the ESC key repeatedly as the system starts and you will get the SteamOS boot menu. Select "Restore System Partition" from the menu. The system will starts and prompt you for confirmation. After restoring your system disk, your system will boot back into SteamOS

If the recovery partition does not fix the problem, every Steam Machine also includes a USB recovery disk. This will completely reimage your hard drive and return the machine to its factory state. Any Steam games or desktop changes will be lost. To use the recovery disk, you will need a keyboard attached to your SteamOS machine. Turn the machine off, insert the USB recovery disk, and turn it back on. Press F11 as the system starts and you will get the firmware "Select Boot Device" menu. Select the first "UEFI: Centon Centon USB 8.07" entry and you will get the SteamOS recovery disk boot menu. Select "Restore Entire Disk" from the menu. Your machine will be completely reinstalled. When the process completes, the machine will shutdown. Turn the machine back on to boot into SteamOS.
The drivers for SteamOS are provided as part of the system image and integrated by Valve. Valve will be integrating new and updated drivers over time. The process for installing new drivers should not be different from any other distribution in that the Debian community or Valve will re-package new driver releases and re-distribute them. If an end-user wants to install a new driver package on top of their existing SteamOS installation we expect to remain largely compatible with the Debian packaging scheme.
All Steam applications execute using the Steam Runtime[github.com] which is a fixed binary-compatibility layer for Linux applications. This enables any application to run on any Linux distribution that supports the Steam Runtime without recompiling. As long as your development environment targets Ubuntu 12.04 LTS with the Steam Runtime, it will run without change on SteamOS. If you are a Steam partner, see the Linux development page for more details on creating Steam applications for Linux and SteamOS.
You can enter any issues in our GitHub community tracker[github.com] Or start a new thread in the SteamOS discussion group