Hi,
Steeping is done to extract color and some flavor from the grains, but in general it does not extract most of the sugars from the grain. Typically only 5-15% of the sugars are extracted when steeping.
In contrast, mashing (the process of holding the grain at a set temperature for an hour or so, then lautering it) is designed to break down complex sugars in the grain so they can more easily be extracted and fermented. In addition to extracting color and flavor, a significant amount of sugar is extracted (typically 70-75%) that makes up your starting gravity. Mashing also allows you to use some ingredients that you can't be steeped, giving you more flexibility. The downside is that it takes more time, and slightly more equipment.
Cheers!
Brad