There was talk about making "steam deck optimized" versions of games that would ditch high resolution assets as they would be pointless on a 720p display. Nothing seems to have materialized.

That said, there are reasons why games are taking more and more space. Game assets cannot be compressed the same way image files intended for humans can. They have to be stored losslessly, or there WILL be rendering artefacts. And a material or texture in a game is composed of a lot more layers than just an RGB image (normal maps, specular maps, material maps, depth maps). And modern game-engines can pre-bake a lot of things that otherwise would have to be rendered in real-time. That pre-baked render data has to be stored, preferably in high resolution to avoid aliasing, and shipped along with all the other game files.

Games aren't ballooning in size for no reason. Stuff like pre-baking essentially trades storage for the ability to get the same looks for less processing. More data layers in textures and materials allows rendering to take shortcuts in how the appearance of a surface is calculated, etc. etc. etc.

But none of this would prevent the option to not download these resource files for ALL detail levels. If you're not gonna run a game on ultra textures, you don't need those files sitting on your drive.