Steam OS is based on arch, and outside of the Steam Deck it's really not that great of a distro. It's just tailor-made for that hardware and has good brand recognition.
Bazzite is a similar concept but operates better as an actual OS outside of being a gaming console.
Depends on the exact Nvidia card you're using. The newer parts all have good drivers, but as you get older things get more fiddly.
But most of the improvement is in Steam's compatibility mode. Proton allows you to run so many games with one click that use to be a whole project to configure.