Steel snare drums are just one option drummers have when selecting drums to use. While these drum have qualities that outshine those found in other metal drums or wood drums, they may produce a sound that isn't right for each performance. In general, a steel snare drum projects better but is harder to blend.
A steel snare drum typically has a thinner shell than a wood one. With less mass, the drum can vibrate very freely when the drummer performs, making the response of the drum often very good as a result.
In addition, the surface of a wood snare drum shell naturally is porous, with tiny groves and pits in it from the grain of the wood. When the drummer plays, this translates to a more diffused sound. By comparison, the shell of a steel snare drum is very smooth, which lets the sound bounce off the shell surface with less muffling.
The lack of mass compared to a wood drum, combined with the smoothness of the steel, translates to a very resonant, bright instrument with a fairly long decay. These are exactly the qualities desired in particular styles of music, such as rock. They make the steel snare drum suitable for situations where the drummer needs more projection, as well.
All drums — and in fact, most instruments — expand and contract slightly in response to changes in temperature in the environment. With a wood drum, if too little or too much moisture is present in the environment, temperature changes can cause issues such as warping and cracking. At best this changes the tone of the drum slightly, and at worst, it makes the drum unstable and therefore unusable. A steel drum does not have this problem, and because most steel drums are stainless steel, they're rust resistant.
On the other hand, a steel snare drum can sound very biting, making it harder for the drummer to blend. In situations where a band or other ensemble wants to tone down volume and get a soft sound, a steel drum can stick out be overpowering.
Another problem with a steel snare drum is that it can produce a lot of overtones, which causes what is known as "bleeding." Bleeding means that audio equipment intended for other instruments picks up the frequencies produced by the drum. This is a major issue in studio recording, because bleeding makes mixing tracks a challenge. Many drummers find they need to switch out their steel drums for a wood one to get a mellower sound and prevent the bleeding effect.