So, what is the Steel-type?
All good RPGs have some sort of all out defensive archetype or class to serve as their defensive unit These units tend to have insane immunities, resistances or simply have access to good armor. In the original Final Fantasy the Warrior class served for this role. Historically, this role was fulfilled by Rock-type, but because Rock-type was destined as the first boss of the original game, it was doomed. Some resurrection of this idea was needed, as otherwise the metagame would have been far too offensively oriented, and in the generations Steel-type declined, that's exactly what happened.
Most classic RPGs also featured machine-based enemies. This was due to the influence of Star Wars, a massively popular science fantasy series that helped the popularize the sub-genre. Various games like Ultima and Final Fantasy tired to add this feature in their fantasy games, as pseudo-scientific elements like Psychics in science-fiction have declined as the we understood our world better. Outside of this, there were other reasons, which we will get on shortly.
The Pre-History of Steel-type: Metal-type:
Despite Pokémon's status as an Urban Science Fantasy, there hasn't been a machine or metal based class. Other RPGs had their Machine classes, Metal Slimes, Iron Giants and whathaveyou. The only species in the original games that had metallic parts was sadly Magnemite and Magneton, so to fix this issue, the franchise needed a new type. This also extended for Iron Ore based species, as those also didn't exist as any mineral ore was made into Rock-type or Ground-type.
There were other reasons why this was type created as well. One was color, as while the original games had Rock-type with gray color, the real color of the type was actually bright brown, as showcased by Sudowoodo of this generation. So, Steel took the role of the gray type from Rock-type.
Another reason why Steel-type was introduced as a Rock-type ascendant was that other types had some sort of ascendant types to them. Water had Ice, Fire had Dragon etc. While Ground served as the ascendant of Rock-type, Ground was much more focused on offense. Something more focused on defense was needed.
The History of the Steel-type:
The first few Steel-types were disheartening. The most successful ones were Skarmory and Steelix, which existed as large physical walls that would be companions to Blissey, the ultimate Special wall. Other species were powerful, like Forretress, Scizor and Magneton, but underutilized, as they had no offensive options, or in Forretress' case, used largely for support. In addition, many of the early Steel-types were overtly min-maxed like Rock-type, with no species with good Special Defense or HP.
The few Steel-type moves were Steel Wing and Iron Tail, both inaccurate moves that served as both as signature moves for Steelix and Skarmory as well as major coverage moves. And Metal Claw, the only move Scizor had besides Steel Wing, was both inaccurate and weak. Nonetheless, these few moves made sure Steel-type would be a major coverage type.
The second batch were insufficient. There were two major Legendaries, Jirachi and Registeel, and a major pseudo-legendary, Metagross, which was so powerful the developers made it unavailable in the wild. Another major species was Aggron, a badass looking species with unfortunate quad weaknesses, and Mawile, which for this generation was a complete joke.
The second batch of Steel moves continued to suck. Meteor Mash and Doom Desire were unreliable signature moves, Iron Defense was mediocre like any defense boosting move, and Metal Sound was just a gimmick. Clear Body was an interesting ability, but it didn't mean much for the type.
The fourth generation was when Steel-type truly shone, however. Steel-type enjoyed the physical-special split fairly well, as it was no longer type dependent on the moves it had to defend against. In addition, the split allowed Steel-type to gain Special moves, which benefit Magneton and Magnezone extremely well. Not all of the new Steel-types were well, but the bulk of them were very good. In addition, this generation made Steel-type much more easily available than any other region, due to mining industry of Sinnoh.
The new moves introduced were a bit lackluster, besides Iron Head and Flash Cannon, both of which became primary moves for the type, and Bullet Punch, which single-handedly saved Scizor and Metagross. Metal Burst and Gyro Ball were unique moves that were very good in situational species, Mirror Shot and Magnet Bomb were sadly useless mid-game moves. Due to newly gained abundance of the type, Magnet Pull became a major staple ability, as Magnezone could now easily trap defensive and offensive cores of other teams.
The fifth generation was mediocre for the type. The type gained significant Pokémon like Excadrill and Forretress, but the other Steel-types in the game were lackluster, even those which were good like Bisharp and Cobalion. Klinklang and its line was one of the most infamous species in this generation, but other Steel-types like Escavalier and Durant gained some support, and Genesect was received well as the sole Bug-type Legendary.
The new moves outside of Autotomize were Shift Gear and Gear Grind, which were signature moves for Klinklang, and Heavy Slam, which was useful on only few species. The new abilities, Light Metal and Heavy Metal, were completely useless. Sand Force was a great Ability, but it lacked much use due to lack of power of the types it contained.
Sixth generation turned Steel-type's fortunes yet again. While the type was nerfed by losing its resistances to Dark and Ghost-types, it gained resistance and effectiveness against the new Fairy type, which immediately became the dominant type of the metagame. The new Steel-types were few but infamous, Aegislash was quite broken and Klefki had an infamous SwagPlay ParaFusion tactic.Steel-type also gained tons of powerful Megas, all of which were significant in some manner if not broken.
There was only one new move, which was King's Shield. It was a signature move.
Seventh generation continued the rise by giving the type powerful species. The common species introduced in this generation were useful, but not too interesting. The Legendaries, on the other hand, were extremely powerful and versatile, though still could be easily defeated... if they didn't get the momentum. Nonetheless, the new Steel-type Legendaries immediately put the type in the top of the food chain, allowing Steel-type to completely replace all previous dominant types.
The only new moves were Smart Strike, which was the only common perfect accuracy move of the type, and Sunsteel Strike, the signature move of Solgaleo.
The Overview of Steel-types:
Steel-type slowly but steadily moved from high-mid tier to the top of all types within six generations. The type is easily the most successful of all types, despite being relatively rare, and has a great variety of coverage moves, despite lacking power. While Steel-type initially started as a defensive oriented type, as Fairy-type were introduced, the type gained significance as an offensive type, as it already was effective against several other types neutrally or super-effectively.
Steel-type's rarity is relatively insignificant because player can find a Steel-type in early game or mid game in any generation, and type is generally that good enough to worth it. Its lack of power remains a hindrance in competitive play, but introduction of Z-moves allows Steel-type to punch in holes quickly.
Steel-type will likely get even better, as it contains several popular species, tons of Legendaries, and several popular trainers, even if they are not abundant in numbers. Outside of another defensive nerf, it is unlikely that the type will crumble. But another defensive nerf, particularly one that will give it another weakness will crumble the type, simply due to abundance of quad weaknesses.