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 not fully up-to-date with bleeding edge display technologies but is there any reason that a passive DP to HDMI adapter couldn’t easily solve this issue? And would it cause Valve any strife to include one in the box?
Passive DP-to-HDMI adapters only work if the device on the Displayport end supports Dual-Mode, i.e. using the Displayport to send an HDMI signal. They often do, but it would require the same driver support for HDMI 2.1. So this would require an active adapter.
Bother 😒