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That being said, my suggestion is not meant to prevent data loss in general, like from a failing drive. Steam Cloud is already sort of a good feature for that. But Steam Cloud itself is the main reason, i'm suggesting this, since it itself can sometimes be the problem related to losing your in-game progress. It would mostly remove it as a potential point of failure, if you can set it up to make at least one local backup of any save synced with the cloud, before doing so.
If there are any Steam Cloud errors, Steam could just notice the backup with the same timestamp and ask the user to restore it from there.
At the end of the day there is no need to turn Steam into a Swiss Army Knife and add more bloat to an already bloated client when there are already solutions out there designed for that specific purpose that are quick and easy to set up and configure.
Heck, it's still tedious if you are more tech-savvy, because there isn't a standard for save-file locations. You can catch most by just backing up your user folder or AppData + Documents, but some are at more exotic places you can't possibly know, without looking it up.
Also, you'd still risk loosing a lot of progress potentially, if you don't backup after most gaming sessions.
It's just such a small QoL thing i'm suggesting here in regards to the Steam Cloud, not a huge feature that should have any meaningful impact on how Steam works or performs.I'm surprised, you bring up bloat, since most of Steam's features just make it a great service, like Steam Input, pre-compiled OGL/Vulkan shaders or Proton just to name a few.
Most games do not have this feature. I only have one game currently installed, which does this. Well, technically 2 more, but only because of anti-cheat mods i've installed for these that make local save backups to reduce the impact of malicious cheaters breaking people's savefiles.