I think the first (possibly only) time I heard this nickname was in the mnemonic rhyme about English monarchs. "Willie, Willie, Harry, Ste, / Harry, Dick, John, Harry Three..." I always thought they probably just needed a rhyme. I'm encouraged to know that it really is a legitimate nickname for Steven.
This nickname really makes no sense. I mean, you wouldn't call someone Day instead of Dave or David, or My instead of Mike or Michael, so what is the point of Ste instead of Steve or Stephen/Steven?
― Anonymous User 5/9/2015
2
This name doesn't seem to evolve naturally from Steve or Steven. Steve itself doesn't seem to need much more shortening by the standards of most.