Why/how are so many people confused about it being steam? It's clearly meant to be cartoony. As you get more damage, your character gets angrier, and they begin to turn red and steam up like an anime or Tom & Jerry character. It's just another addition to the silliness.
Of course, I understand that not everyone's happy about it. We've had lots of new visuals so far, like team colors being highlights instead of costumes, or KO explosions being colored to show who scored the point, but this is the first one that's seemed... obtrusive. This could get especially annoying in fights where multiple combatants stay in the higher percentages for long periods of time, and it could ruin the traditional flow of battle on 4-player fights by having everyone suddenly gang up on the steaming guy.
That said, I personally kinda like it.