On one hand it absolutely does allow for niches to be filled, but on another it's a dumpster full of trash with gold in-between. There's a danger of either fatigue or slump sales over time. Maybe another Nintendo Seal of Quality on the horizon will emerge.
While Steam could do that, there's no incentive for them to. They can lay out $0 into such a project and let third parties sift the trash for them and do journalism on letting potential customers know what games are good. Win-win.
It's not a good thing: if it was a good thing Steam would have done it at launch.
Steam only got traction because they were curating. There were loads of places you could dump games: people were installing Steam because games they cared about were on Steam. And getting on Steam in the early years was a guaranteed boost in distribution because they were hand picking quality games.
Somehow they managed to drastically reduce the value proposition twice (first with Greenlight, then with Direct) and keep the same cut, while the value-adds like Steamworks have gotten commoditized (see EGS)
In the early days the value proposition for both sides was staked on curation, but yeah you're totally right: their install base expanded until it encompassed enough people who don't mind having barrels of slop shoveled down their way... and that allowed them to do away with the curation.
But if you're on the other side of the equation that's paying for the privilege of being in dumped into the slop trough it's not a good deal.
You're paying the same amount to get dumped into a cesspit with minimal support as the earliest titles were paying to be hand picked like a golden child and paraded around high-intent buyers.
I'm curious when the cutover occurred in consumer sentiment from "We use Steam because we need to for some specific titlese" to "We use Steam because it's the most convenient way to purchase"