I have 4 main collections. I have favorites, multiplayer games that I play with friends, games that I have yet to finish but do plan on playing, and then games that I’ve finished. The unsorted stuff are games that I don’t plan on playing. Maybe I’ll get to the unsorted stuff someday, but not for the near future.
It’s simple enough for me to understand and manage.
I just call that category “Meh.” I also have a special category for those few games that I bought and never worked properly in Linux, but I hope one day will (mostly old DX9 stuff like Hexen II).
There’s the main ‘folder/category/thing’ every game is added to by default, one for favorites that’s already built into Steam, and two more I added called “meh” and “shit”.
The main folder acts as my unsorted/unplayed category, and Favorites/Meh/Shit covers pretty much everything else.
In my case, it's even worse due to using other services too. What I end up doing is noting everything on digital sheets like LibreOffice, and trying to organize in a way that makes sense.
I honestly didn't even know you could. With just over 100 games I've never felt the need to though, I can wade through them pretty easily and remember what I have.
I have my Steam Library organized by genre. FPS, RPG, RTS, ect. Then I have a backlog category where I put the games I know I want to get around to playing eventually and a Completed category for games that I've finished and am probably not going to go back to.
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