This device is being shown off this week in Las Vegas at the Consumer Electronics Show. There's many getting all excited about it and some getting upset for various reasons. While I haven't talked with Valve recently about their Steam Linux console, a few things aren't adding up with what's being shown / talked about this week.
Xi3 may very well be Valve's hardware partner for their Linux gaming console, but if anything the Piston device being shown this week is a very early prototype. I wouldn't expect to hear anything really substantive on the matter of their Linux-based gaming hardware console for several months. Valve's Linux software platform also would still have a ways to mature.
Aside from the links above, below is a brief video of the Xi3/Valve "Piston" prototype.