steam.sh is not part of the Steam Runtime.
@kisak-valve, please could you move this to ValveSoftware/steam-for-linux?
Actually, this is not limited to xz only, but also busybox tar. steam.sh is using GNU only tar options.
I guess the right move would be to finally get sh scripts, not bash scripts, with the right helper programs if needed and a conservative usage of commands and options. Should increase by a lot the compatibitly surface.
Nothing extracted yet.
the following patch in order to enable busybox xz compatibility upon udpates:
https://gist.github.com/sylware/be7ddb53c4d05470b8cafcb89156f1f6#file-steam-sh-patch