I have 4 of the 8bitdo controllers (various Bluetooth models) and games have varying levels of support for them. Sometimes all the controllers show up as 1st player, but mostly steam handles it fine. I’ve also use Microsoft branded controllers in the past with 0 issues, but then you’re locked into to that as mixing those with playstation or 3rd party ones can lead to the same player mapping weirdness. Also, the Xbox variety needs a 2.4Ghz dongle to work with the deck, but I’ve found this to be superior to Bluetooth in crowded environments.
I used the old 360 dongle and controller for years. I’m not sure the driver needs to be updated regularly. It’s just buttons?