It's a little more than that. Yes, often the invisible steel areas do not align exactly with the steel plate graphics. But even when they do align, it is still true that if the lemming stands just outside the edge of steel area and starts digging, the dig tunnel will still remove the parts that are overlapping with the steel.
Basically it boils down to the game taking shortcuts when it comes to steel handling. Unlike latter game engines such as Lemmings 2, removal actions (eg. dig, bash, mine, explode) will always remove everything in the area of removal, even if there are steel partially overlapping in some of that area. The way steel prevents removal actions is merely that before the action is taken, the game basically checks that there is steel vaguely around the area (and usually this is not a thorough check at all, typically checking much smaller area than the corresponding area of removal), and prevent the action from taking effect at all (or in some cases, prevent you from even assigning the skill to begin with) if the check passes. It's an all-or-nothing effect, so for example, in the inverse case if lemming is standing on edge of steel but still on the steel side, and he explodes, the explosion will not take out any terrain whatsoever within its radius (even, say, some pixels of build bricks above the steel) merely because the lemming is detected to be standing on steel. While if he's standing just a few pixels away into the non-steel side, the explosion will take out the whole radius, including the parts overlapping with steel.
I think it's fair to say that conceptually steel is meant to be indestructible, and in basically all later games in the franchise are actually implemented as such. The fact that it isn't quite so in Lemmings 1 is more due to "bad" implementation (possibly for performance reasons). AFAIK no official levels ever require steel destruction to solve.
