Indeed. I guess one reason is that PC gaming hardware was always a moving target, and so newer games and graphics APIs exploiting features found in newer hardware, and hardware makers enabling them (driven by capitalism) created a vicious cycle.

Luckily the market did find a sort of stable target to aim for with the Steam Deck; many modern titles do aim to work well with those modest specs, such as Cyberpunk 2077, Baldur's Gate 3 etc. And when Blizzard launched Diablo IV on Steam, they explicitly announced that they had partnered with Valve to ensure the game was heavily optimised for the Deck and very playable on Day 1 (and it was indeed, from my experience).

Hopefully we see more such examples with the Steam Machine. And I do agree with you that they could've gone with specs worth $250, but sadly with the current pricing crisis, $250 won't get much and I bet many people would've laughed at the specs. Even the Switch 2 now costs $500. :(