Both are popular Linux distributions, but they target different markets, and this creates some fundamental differences between them. The key difference lies in how they update.
Debian is one of the older Linux distributions that has a certain standard update model, where many small files are combined and released as one big new version.
However, Valve believes that this model is not ideal for the Steam Deck. At launch, additional minor updates will clearly be needed to make sure everything works perfectly. And this is where, as designer Lawrence Yang says, Arch comes to the rescue:
“Arch Linux is one of the main reasons, there are several, but the main one is that Arch's rolling updates allow us to speed up SteamOS 3.0 development. We were making a number of updates and changes to make sure everything works well, and Arch turned out to be the better choice.”
Debian is more stable, but Arch updates faster.