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In this case it’s referring to the fact that the OS is built upon the same containerization technology used on cloud platforms such as Kubernetes. As a marketing tool it’s a bit buzzwordy, but it’s not about running the core OS components outside of the physical machine here.
I can see the use case for someone who wants a single OS install on the Steam Deck that does gaming just about as well as SteamOS does, but has a more fleshed out desktop experience (or even just a different one). The linked article goes into detail on various desktop-focused developments within Bazzite that wouldn’t really make sense for Valve to prioritize in SteamOS itself.