Since games don’t have to run with more than user privileges and steam runs in flatpak, you could run them as a different user account with very limited permissions.
That said, flatpak should be pretty secure as far as I’m aware if you make sure that permissions for the apps running are restricted appropriately. I’m not sure how restricted you can make steam and still have it work though
You can use offline mode for steam if you’re okay with steam having internet but not games. But there’s no way to use steam entirely offline. Internet access is a fundamental part of the system they have.
There’s also a question of what your threat model is. Like are you trying to prevent causal access of your files by games, or like a sophisticated attempt to compromise the system conveyed through a game. For the former flatpak seems sufficient. For the latter you probably need a dedicated machine. And there’s varying levels in between
I’m a little confused where the NAT comes in. It sounds like you want to use the same addresses on the server and the client, which means that there is no translation going on, just routing?
I’m not familiar with wireguard, so I’m not going to be much help with that, but I’d imagine that you need to tell the server that that subnet is routed via the wireguard interface? If you do like
ip -6 route
on the server do you see thatfd42:413d:a91f:dd37::/64
is routed via wireguard?