So we've been sterilizing our bottles with a microwave steam bottle sterilizer. Is this at all required? What risks might exist if we don't bother?
No, it's not required. Lots of children are born into dirty surroundings and still survive.
Yes, it's advised for newborns and infants because they have not yet built up enough immune resistance. Baby bottles, teething toys, and other objects that the newborn/infant puts in the mouth can be sterilized to reduce any unnecessary burden on the child.
Once the kids start sucking on all kinds of non-sterilized toys, non-toys, stroller wheels!, etc. you can stop sterilizing.
While you are still sterilizing, be sure to read and follow the instructions carefully. It's very easy to contaminate a newly-sterilized set of bottles with a thoughtless hand movement.
PS: When we were expecting, we were lured into the fear trap and bought a brand-new Philips sterilizer. We could probably have found the same used for much less, or even a kit that can be used in the microwave like you mention. Fear can help people open their eyes and do a little basic research (good), or it can sucker them into spending more than they have to (silly).
The current scientific consensus is:
No. It is not necessary to sterilize bottles, not even for newborns.
The only exception are bottle teats made of rubber - the rubber can become porous over time, so occasional sterilization is recommended. However, most bottle teats are made of silicone, which is not affected.
The primary safety measure to take with milk bottles is to not let them sit for too long, because harmful germs do develop if the milk is not fresh. However, if the milk is fresh, sterilizing the bottle does not make a difference.
Of course, this assumes the bottles are thoroughly cleaned just like regular dishes.
"Säuglingsernährung und Ernährung der stillenden Mutter - Handlungsempfehlungen" ("Nutrition of babies and of breastfeeding mothers - practical guidelines"), published in Monatsschrift Kinderheilkunde, October 2010.
This is a comprehensive document on nutrition, jointly authored by multiple physicians and nutrition experts from hospitals, research institutes and German government institutes.
It has a paragraph on hygiene:
English translation (by me, no guarantees):
Babies take a while to build up resistance to infection, so sterilising bottles, at least for the first few months, is definitely recommended. Milk is a very good food not only for babies, but for bacteria so you want to get bottles clean, and then sterilised!
On a daily basis, sterilization is not necessary, particularly if these things are washed with soap and hot water shortly after use.
However, when someone in the home gets sick, the bottles, nipples, pacifiers and mouthy-toys should be sterilized. Also any items left unwashed for a while (like the pacifier tied to the stroller) could use sterilization from time to time.
It was easy for me to sterilize because we had an electric dishwasher, which gets hot enough for long enough to kill bacteria. We put the nipples and small items in a special basket, and it worked like a charm.