Actually....
Yes you can. You must start in online-mode, but if the library you want to use is free, you are able to start the game and then go to offline mode or simply turn your wifi/lan off. This will also free the library for others to use, so yes, multiple people can play a game from the same library at the same time. I know this because I shared my Steam library with my brother... when asking why I can't see him playing anything, he said he has done this since he plays only singleplayer games anyway.
Then again I haven't seen much problem with the library locking. I've also shared my steam library to my girlfriend too, and if she's playing something from my Steam library, I'll just play something from Epic, or some DRM free game, or just do something else.
I think the current restrictions for virtual properties are decent, and I don't have any problem with them. I very rarely buy games that are more than 20 euros anyways. If I want to play something with a friend at the same time, the price for that is pretty low. Also Epic and other sites are constantly giving free quality games, so there is constant surplus of games to play.
Steam also released their Remote Play Together which developers can opt in. It allows streaming your game to your friends, while their inputs are streamed back to you. So you are able to play singlescreen/shared screen games over the internet. If the game has both online and splitscreen, this allows the game to be played online with your buddies with a single copy of the game. I think this generally increases the players and buyers, rather than less copies sold...
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I believe gamesharing and some slight misuse is very minor problem compared to pure piracy (nobody pays for the game) or the gray markets or after market stores for digital keys. In the best case scenario, the latter is just you buying the game from somebody else... who probably bought it from some bundle. The less good option is that you are buying from another location. Virtual markets showing different prices are not very good solution, but buying with eg. 3rd world country prices when you shouldn't, you probably avoid taxes and severely damage income of the game company (which does not hurt big companies so much, but indies, yes). The worst case option is that the original game was bought with stolen credit card, or some guy solds copies he got by faking to be a "social media influencer" or otherwise gotten illegally... The video game company can ban the key, but what would you do other than whine if your copy was illegal and suddenly disappeared? So in these cases the company, or in case of indies, sometimes a single person will pay for the game you got. Several indies have actually pleaded people to rather pirate their games than buying them from kinguin/g2a and such...