The window is not resizable. Alt+drag is overriding that and ignoring the fact that steam removes the 'sizable' action from the window properties.
There should at the very minimum be a minimum size set, no matter how the window is resized. Other toolkits in Linux can do this and not allow the window to be resized below a certain point even with alt+dragging so why doesn't steam?
The alt+drag is a common way for some people to move and resize windows in Linux, it should not be ignored, plus there are other things that can resize the windows as well, such as kwin rules (I first noticed this on my netbook where all windows are maximized by default).
Just because there is no direct way to resize the window does not mean this is not a bug. The window is resizeable and has no minimum size set... at least from the viewpoint of the window manager.
We're trying to tell the window manager it isn't resizable by removing the 'sizable' action. We're also going to force the min/max size in the next client update.
Nothing extracted yet.
The properties window of all games does not have a fixed layout so doesn't expand to fill the space when the window is resized (with alt+drag). This is worst when shrinking the window as it hides elements that should be shown. There is also no minimum size set so the window can be resized ridiculously small and sometimes opens in the smallest possible size: