The TL;DR is that the organization that controls the HDMI standard won’t allow any open source implementation of HDMI 2.1.
So the hardware is fully capable of it, but they’ll get in trouble if them officially implement it.
Instead it’s officially HDMI 2 (which maxes out at 4k @ 60Hz), but through a technique called chroma sub-sampling they’ve been able to raise that up to 4k @ 120Hz.
However there are some minor reductions in picture quality because of this, and the whole thing would be much easier if the HDMI forum would be more consumer friendly.
In the meantime, the Steam Machine also has display port as a completely issue free display option.
I’m honestly surprised TV OEMs haven’t bothered to at least try throwing in DisplayPort, especially during the period of time it far exceeded the highest possible quality on HDMI.
HDMI is just the last hardware standard created from the ashes of the format wars that has no practical place anymore. It only exists to collect hostage licensing fees.