It's not perfect but personally I never noticed any large mistakes, did you? OTOH I had in-game timers reporting largely underestimated playtimes, probably because they are tied to a single save.
There were cases of people reporting exceedingly short times (Portal 2?), but on average I suppose they are balanced by those forgetting (or purposefully leaving) games/launchers running in the background.
I've definitely had play sessions it outright didn't record, that's for sure.
Also, if a game closes wrong/crashes on exit, Steam will sometimes continue to count it as running. I once discovered I'd been "playing" New Vegas for 24 hours straight as a result of that!
Buying games you aren't going to play is a waste of money (no matter how cheap they are). Forcing yourself to play games you wish you hadn't bought is a waste of time. Both are best avoided.