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The Steinitz Defense is generally considered outdated by modern professional players. However, according to the Lichess Database, the move 3... d6 is actually the second most popular choice after 1.e4 e5 2.Nf3 Nc6 3.Bb5. (Among master games, 3... d6 is only the 8th most popular choice.)
I am wondering what makes the move 3... d6 popular among non-professionals. After all, this move has the reputation of being outdated, does not develop a piece, and appears passive.
If it is called the Steinitz defence it cant be all that bad. Steinitz himself employed it because he wanted to keep as much pawn control over the center as he could, but as others have said, the resulting positions are a bit passive and not to the taste of modern grandmasters. It is playable by unsophisticated Black players because generally they only face unsophisticated White players who do not know how to exploit their small advantage.
The one piece of theory you really ought to know is the "Tarrasch trap" 1.e4 e5 2.Nf3 Nc6 3.Bb5 d6 4.d4 Bd7 5.Nc3 Be7 6.0-0 Nf6 7.Re1 0-0? 8.Bxc6! Bxc6 9.dxe5 dxe5 10.Qxd8 Raxd8 11.Nxe5 Bxe4 12.Nxe4 Nxe4 13.Nd3! f5 14 f3 Bc5+ 15.Nxc5 Nxc5 16.Bg5 Rd5 17.Be7 and wins because if 17. Re8/f7 then 18.c4! (Tarrasch-Marco, Dresden, 1896) This trap is theoretically important because it shows that Steinitz original plan of maintaining a pawn center cannot be achieved.
Amusingly, I once played in a tournament where 7..0-0? was played against a friend of mine. My friend was aware that this was an error that should lose at least a Pawn, but could not recall exactly how it went, just that it began by exchanging everything off. He was reluctant to do this, because if he did make all the exchanges, but still could not remember the final moves, he might only draw against a weak opponent. So after thinking for a very long time, he refrained from the exchanges but eventually lost on time.
The move 3... d6 is passive, but it is not completely unjustified. White's bishop on b5 threatens to trade itself for black's knight on c6, leaving black's e5 pawn undefended and capturable by white's knight. Although white can't actually take on e5 because of the Qd4 fork, most amateurs who aren't familiar with this line don't calculate this far ahead.
It is a solid option which is relatively easy to play since you do not need to memorize so many concrete variations as in the Berlin defense or in the Marshall gambit, for example.
Because they want to play Bg4 then Qf6 then Ne7 then Nf5.
Because they can avoid all white's tactics on e5, while still having their tactics on e4.
Because it will often transpose to the normal Morphy lines.
Those are some reasons that immediately come to mind.
