Steam dryers work by subjecting clothes to a supply of steam that penetrates the clothing to help soften it and reduce wrinkles. However, the term "steam dryer" is actually a bit confusing as these appliances aren't actually designed to dry clothes.
The real purpose of a steam dryer is to help freshen up clothes, especially for situations when a person doesn't have enough time to fully wash and dry their clothes. In this case, putting the clothes through a quick cycle in the steam dryer does not only help eliminate any wrinkles, but the high temperature of the steam also effectively sanitizes the fabric without using water or detergent. The hot steam penetrates deep into the fabric to help eliminate any odors or smells.
The only major issue with a steam dryer is that if an item of clothing has a stain, the steam can actually help set the stain into the fabric, if steps aren't taken to remove the stain before putting the item in the steam dryer.
There are a number of different types of steam dryers on the market, only some of which actually directly subject the clothes to pure steam. Some of the other steam dryers, such as those produced by Maytag, use a fine spray of mist, which is then heated up to transform into steam.