It's snapshotted from Arch, once a year they bump the kernel and include "updated Arch Linux base" as a release note.

SteamOS 3.7 is still on Kernel 6.11 and KDE Plasma 6.2, for example. Bazzite is 6.17 and Plasma 6.5.

This matters if you're using more recent hardware or want the latest driver optimizations. My 9070 XT is supported by Bazzite, SteamOS won't even boot.