amok: To be honest, I do not really like racing games, so I own very few and have not tried one with it yet. I have played a 3D platformer that have racing in it, but that does not really count (Beyond Good and Evil), and that felt fine.
For what I have used it for, though, it works very well. It feels responsive and precise. I played a nonogram game with it, and I had no problems keeping straight lines or moving accurately from tiny square to tiny square. I also had no issues with the couple of FPS games I tried, nor with platformers. The actual sticks are based on Tunnel Magnetoresistance (indeed!), meaning they detect magnetic fields rather than relying on direct physical contact. So in theory, that should make them more precise and reduce issues such as stick drift. Whether that is true or not, is too early to say, since the controller is still so new. But the sticks feel good in generall.
I have seen people online, especially some very much into racing or fighting games, that say it is not the best controller for that extreme level of precision. However, the controllers they are comparing it to are the top-end models that easily cost double of that the Steam controller does.
Controllers for fighting games usually use a specialized D-Pad and can get pretty expensive. No off-the-shelf mainstream gamepad that I tested is good enough for that application, but, from what I understand, some XBox models have decent "clicky" D-pad.
Don't expect much from the controller is the Steam Deck is anything to go by, the D-pad is there and works...
The Steam Controller (2?) is said to have very little deadzones and that is very important for precision "driving" but spring feedback is almost as important for a "natural and organic" feel.
Some controllers setup is a bit "harsh" on the initial input, meaning for the lack of better explanation, you start to press towards one side, you feel the spring strength and suddenly after overcoming the spring tension threshold, the stick moves more than you want. The best term to approximate the behavior is "sticktion" (stick+friction).
That said, most people use the sticks as a on-off control (with the eventual half-press to, say, walk instead of running), very D-Pad like and that's totally fine.
Racing (sticks and triggers) and fighting games (D-Pad) are the only use cases I know that can actually test the precision and feel of inputs but the tester must to be experienced and that's why is so difficult to find good reviews. That said, most people don't care about niche/edge cases so it makes sense...