Maybe I'm missing something here and I now know these can be mapped in different ways.

BUT, how many buttons does it have?  Maybe someone can explain this to me but both X360/PS3 has 16 buttons

PS360

2 Thumbsticks/Clicks
4 D-PAD
4 Face Buttons
2 Menu Start/Select
2 Triggers
2 Bumpers

Now when I count up Steam Controller

Steam Controller

2 Trackpads/Clicks
4 ergh Facebuttons? 2 on each side
2 Triggers
2 Bumpers
1 Touchpad used for four buttons
3 buttons that seem similar to start/select

Things it is notably missing

4 facebuttons on the right hand side allowing you to always have your left thumb to be used for movement
4 D-Pad buttons

I'm Probably missing something with this steam controller so can somebody explain this to me?

the middle screen can be more than one button. it is touch and click. so you can touch it to select different things, but press it to actually enable what you select

Would that replicate the D-Pad then?  

From the looks of that picture, the four face buttons are changed to the two buttons on each side (which certainly is a dramatic change from the traditional 4 on the right side), while the D-pad is absent, and instead a touchscreen is in place (which I think has much more functionality than the current 360/PS home button).

In general, I think people are focusing too much on what this controller can't do in relation to a traditional controller, and not enough on what this controller could do that a traditional controller could not.  I'm personally not going to write this controller off until i've actually had a chance to try it.

2 things

1.  Since the face buttons are on both sides any time you use your left hand for the left buttons you will have to stop moving unless you decide to use your index fingers insteads.

2. How does that have more funcionality?

it has 2 buttons on the back. in the picture used to crouch and toggle zoom. and the touchpad isn't only usable as one button. i believe they said you can click it in different corners and it counts as a different button then.

Ahh ok,  that makes sense then.  So 2 triggers, 2 bumbers, 2 pack buttons? That would help with the weird placement of face buttons

its designed for pc use for pc games. no dpad needed. the touchpads are supposed to give a more accurate feel of a mouse. but it has 14 real buttons (compared to 16 for ps3/xbox) and 1 button that has many uses, so it should fare fine. the dpad on most pc games is used to select items(weapons/abilities/etc) the screen button on this would be better for that i think.

I still dont understand to be honest with you.  I dont see how it replicated the mouse wheel.  Anyways, Cris explained it had two back buttons so I think that will do it for this thread :)

locking at OP's behest.