Interesting on paper, but good luck running games with that setup.

If I understand correctly this basically starts a container which itself spawns a VM running windows. Good for running Minesweeper and probably not much else.

The short answer is: you don’t unfortunately.

You already listed what the options are. The Xbox app and UWP games are not an option on SteamOS, and Windows support is suboptimal. As for Xbox cloud, it’s alright as long as you have a good internet access, which kind of defeats the purpose of a handheld.

My all time favorite co-op games are: Helldivers 2, Vermintide 2 and Deep Rock Galactic. They are very much online games tough.

For offline local co-op my picks would be: the entire Trine series, Streets of Rage 4, Earth Defense Force 5 and Renegade Ops.