As I understand it, Kodi’s repaint optimizations prevent the Steam Overlay from working properly all of the time.
More specifically, when Kodi is not making a call to paint, the Steam Overlay cannot render. Because Kodi does not have a continuous paint loop, but rather only paints when there are changes onscreen, this is bad for Steam users.
This is important is because there are a rapidly growing number of users for whom Steam is their remote control software. Steam Controller, Steam Machine, DualShock 4, and Xbox Controller users all potentially fall into this category. By the end of 2017, it is likely that Steam will make these remote control features far more robust, attracting many more users.
If you would like a suggestion for implementation approach: I would like a setting to force continuous, fullscreen repaints in the menu, with the option to specify framerate (as well as auto-detect). This should allow the Steam Overlay – as well as its on-screen keyboard – to function normally.
Thank you for reading, and thank you for one of the best entertainment experiences in history!