The ability to display HDR mapping and actually being HDR are two different things which leads to this confusion a lot.

The Steam Deck (OLED) can display HDR, but it itself is not “true” HDR, essentially due to the nit output of the screen.

This is why things often look weird with HDR (in general on non-HDR monitors) - it suggests there’s the capability of showing the HDR mapping but there is no support from the display to make sense of the mapping. This is when things look washed out or have a soft of halo shimmering effect.

From my understanding, the OLED is able to display HDR content mapping natively, but itself is not true HDR (basically due to not being bright enough). An example of this in action would be Spider-Man OLED Native (1), Spider-Man OLED Docked with a true HDR display (2), with Spider-Man non-oled HDR on (3) (if possible) and HDR off (4) for reference.

With 1), you see the Steam Deck’s ability to display HDR

With 2), you see the displays ability to display HDR

With 3), you see what HDR looks like on a non HDR display

With 4) you see what HDR looks like on a HDR display

Basically, the Steam Deck screen can display HDR content but isn’t true HDR because it caps out at 1,000 nits. External displays supporting HDR can take advantage of it, and generally even HDR-lite still “looks good”. There’s a number of monitor manufacturers that claim HDR but it’s actually HDR-400. IIRC the Steam Deck is HDR-1000, but true HDR can go all the way to 4,000 nits which is why the Deck isn’t “true” HDR.

This is all just my understanding from information I’ve gathered over time and I’m likely somewhat inaccurate, but I think overall it’s a good guideline that explains the differences.

Hope that clears things up!