The description says “best used in non-direct sunlight applications”. Does that mean do not apply in direct sunlight or something else?

This means if the product is exposed to constant direct sunlight it will fade. Eastwood states even if it fades do to direct sunlight / uv exposure it's still will protect from new rust forming. It is recommended that if the part your covering is exposed to constant sunlight then a top coat paint should be used.

Can you use indoors and on steam piping?

Yes this can be used indoors, definitely follow protocols for applying any paint indoors. This particular product has a relatively low max operating temp. I think right around 200⁰. Eastwood has a similar product called rust encapsulator PLATINUM. That product has high heat capability. I would do some more research as all steam pipe should be RED and there is likely high heat steam pipe paint out there.

Brand	Eastwood
Item Weight	2.86 kg
Color	ブラック
Material	濃縮
Laser Class	耐熱性。
Paint Type	スプレー
Item Weight	2.86 Kilograms

Eastwood Mate ブラック 錆び防止 カプセル化剤 プラスガロン 長持ち 耐久性仕上げ 耐熱性

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Eastwood Mate ブラック錆び防止カプセル化剤プラスガロン長持ち耐久性仕上げ耐熱性