The Steele Dossier is considered fiction mainly because many of its claims were not corroborated. Also, it seemed to be part of a political strategy. It was full of unsubstantiated rumors that were then spread around as if they were facts, but when investigated, there was no real substance to them.
One main reason is lack of evidence. A lot of the claims in the dossier were not supported by any hard proof. So it's hard to consider it as fact.