alt Hacker NewsSTEP doesn't preserve all of your design intent (sketches etc.) but it does preserve the geometry (edges, vertexes, faces). So it is a lot easier to work with it because it is lossless and precise. Curves are curves, not quantised/faceted.
So in our image processing analogy, it is still in a sense a "flattened" representation of the layers, but it's a vector format. The best way to think of it is broadly like a 3D SVG, I guess.
https://en.wikipedia.org/wiki/ISO_10303-21
3D printer slicers (except maybe Cura without a paid add-on) can usually load STEP now, but they are still internally meshing before slicing. I think Orca/Bambu/PrusaSlicer all give you some control over that meshing (they all use OpenCascade to do it, in fact).
In FreeCAD you can do things like defeaturing, so if you have a hole in a rounded plate, you can delete the hole, you can delete corner-rounding. You can also break STEP files down to faces and use the surface/curves tool to work on them, or use them as a BaseFeature for a Part Design Body, etc.
This is a pretty useful video for showing the differences: