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it's profit based
What exactly those sales/profit limits are nobody knows but Steam.
But i seen games on the store that released years ago and are still profile limited.
I seem to remember someone who knows more than me saying the threshold is $1,000 in sales.
They can be. There are multiple factors that can remove the profile limitations, but none of them are public so that they can't be abused. The algorithm factors in revenue, number of reviews, number of followers, number of downloads, etc. Sales is likely worth more than any other factor, but I've seen free games get the limitation removed, it usually just takes longer. Expensive games tend to get the limit removed in a couple hours, or even before launch if there was a pre order. Cheap games I've seen take weeks to remove it and some free games take months or never get there at all.
You could dig Steamworks Documentation and Support pages for a better answer, but Valve basically wanted to limit achievement and item spam games using automation.
Steam is learning is a phase determining what features of steam the game is allowed to use. There are metrics that have to be met before it is allowed to have achievements, trading cards, etc. Once that phase is over the publisher is notified of what they are allowed to have or what they would need to change in order to qualify for something like turning the trading cards on later. This part of the process isn't fully automated and requires someone at valve to verify that the initial learning phase was completed and the publisher given their notifications, the learning phase typically takes 3 to 5 business days (so about a week if it overlaps a weekend)
Profile features limited is one of the restrictions that can be tagged on the game during and after the learning phase, the game won't count towards the count of games owned and can't be displayed in profile features until its requirements are met to be allowed to be featured on profiles.
Basically there are different requirements to be allowed to make use of each steam feature, whether the game can have achievements, if it can have trading cards, if it can be featured on profiles, etc. The learning phase is the initial period where the game is reviewed to have any of these features or not.
Some things have very clear guidelines, like being allowed to have trading cards the publisher will be told exactly what they need to accomplish to be allowed this as well as having the artwork approved and so on. Other things are more vague, getting rid of "profile features limited" requires "more engagement" but they will only say things like, you need more downloads or more sales, or more reviews, but from what I've heard from publishers, Valve won't tell them exactly how many are needed and the numbers vary between games with a price tag and free games.
That's one of the ways developers are rewarded by steam. Games that are made haphazardly, games that contain spam, games that take a lot of time to make so they ask for payment because of that, or even those that contain certain content, are always selected. Developers who are serious about making games are really concerned and careful on steam.