Steam referring to the dominant technology of the mid-to-late 1800s. Steam engines ran boats, and were seen as the greatest source of power. Thus, popular fantasy and sci-fi of that time period had steam powering air travel, space travel, and all other sorts of stuff. Every space vessel would have an engineer who had big forearms from turning huge lug nuts, and thick callouses on his hands from dealing with the hot metal. And when the engine got really hot, like during a battle when more power was needed from Scotty, the heat generated in the engine room was intense, making the sailors/technicians/spacemen sweat. Thus the steampunk setting is defined as one where techonology required brute manpower to adjust the engine power, with climate/scenery based consequences.

Punk refers to an anarchic, chaotic type of atmosphere, where there are many small gangs and units to battle, and less large-scale armies. The punk atmosphere fits DnD better, as a party of 1st level adventurers will die quickly under the heels of an orc army. Note that Frodo and Sam spent their time avoiding orcs, not fighting them, because of the size of Mordor's forces. RPGs fit better if the PCs are fighting small forces, unless you want the game to involve raising and running an army (in which case you can go play Stronghold or something).

The conjugation to 'steampunk' was based on the popular word cyberpunk which referred to the street gangs using computer hacking skills and martial arts to defeat enemies and slice into the codes of an enemy organization. Alas the setting was done in when someone summoned the Elder Microsoft demon, CR 57.

As steampunk drew heavily from Jules Verne and similar writers, its scenery was dominated by the English of that time period. Character names were not dissimilar to Phineas P. Fogg. Men wore top hats and eye-pieces, women wore lacy hats and fans, and blokes called each other govn'r. The artistry and flavoring were decidedly London by Gaslight. (Hence Brent Sienna's interest in it.)

There were several attempts to make a steampunk role-playing game in the 80s that didn't go very far, altho the minis produced then were fascinating. Unfortunately there was some drift in the miniatures styles from cyberpunk to steampunk, so mohawks and ear studs often appeared where they had no place. All in all though, the theme was one worth revisiting, and several d20 supplements have done so successfully.