This was brought on by severe isolation, a lot of time on my hands, and plenty of source material for D&D that details 17th century technology and onward.

First, pick a setting you like but want to bring technology into. In this case, we're the Forgotten Realms. It's a high fantasy world full of political intrigue and evil around every corner, and basically captures the real medieval society if it had been able to use magic and lived alongside other monsters.

Now, start with the renaissance. Sure, it has to deal with the advent of "Magic vs. Technology," but bear with me. A brilliant scientist discovers new ways of achieiving humanly impossible tasks without the use of magic. He writes his research down and passes it on to a successor, and claims that it is the solution to antimagic-induced lack of ability.

His technology catches on, at first just to those who can afford it, and in one country. It's a good idea to make this country one that is run by a monarchy or aristocracy.

Eventually, other thinkers show up, whose ideas challenge the typical rule. Revolts begin in the country, eventually setting up a new form of government: a democracy, ruled by the people. The technology of the old upper class becomes more widely distributed as people begin reproducing it.

This technology soon becomes widespread, and inspires new inventors to attempt the same thing. In magocratic societies, scientists soon rise to the same status as magic users, creating intellectual aristocracies. It is these countries that continue to turn out new devices and overall improve their countries' lifestyle.

Meanwhile, the democracies end up dissolving the class system and creating opportunity for upward mobility; economics becomes a much more important role, and the modernization also gives rise to resource shortage as people expand (To compensate for this, I borrowed the Purchase DC from d20 Modern). Now, profession becomes more important.

While technology vs magic was settled easily, the next battle is a far more epic scale: the case of science vs. religion. In our world science was used to disprove God's existence (or try to). But, when your God has noticeable effect on the world, it's different.

Clerics, Paladins, and Monks can remove disease with a touch. Faith actually grows, then, because people are more willing to believe in a higher power thanks to Faith healing them. So, this also leads to varying degrees and interpretation of religion due to mortal nature. This gives rise to extremism on both sides, leading to the end of the alignment system.

Allegiances, also from d20 Modern, provide a new system, and Evil becomes more of a form of view than an actual driving force. At the same time, a Paladin or other character can Smite any who actively oppose his moral or religious allegiance.

The Paladin brings us to the big elephant in the room: Guns. Realistically, these bad boys could punch through armor like a hot knife through butter. And, due to innovations, you could see all kinds of fun designs, from double-barreled pistols to literal gunblades. To deal with the sheer badassitude of gunpowder, I chose to introduce a misfire table (see dragon magazine 321), and use Armor as Damage Reduction (see Unearthed Arcana) rather than how hard you are to hit. To keep things fair, I also chose to introduce the Class Defense Bonus (again, Unearthed Arcana).

But, what's the fun in a game if anyone with a gun is able to mow through his enemies at little to no risk? You forget, this is Steampunk Fantasy; escalation is God here.

Enter the Steam-Powered Armor and its' big brother, Steam-Powered Mechs, along with Tanks and various degrees of warrior robot. The armor on these behemoths is thick enough to withstand small arms fire, but due to how heavy they are, they require a steam-powered engine. To house the engine, they need to be big. And, once you've got the bigger populations and the bigger weapons, it's time for some imperialism!

Once the expansion starts, technologically advanced people could be met with fierce opposition from savage tribes and certain monsters. If total genocide is out of the question, a small team of courtiers could try and reach a peace accord between the tribes and their homeland. Wars also lead to poverty among the lower portions of the civil body too, thus leading to dissent and splintered factions. Both of these are perfect scenarios for adventurers.

Likewise, a dungeon crawl would still be a viable option as, when you're mapping out your territory, you're bound to stumble upon an archaeological site of some sort of importance, whether it's an undead city, a tomb filled with traps and treasures, or a prison for something you shouldn't have messed with.

Another thing to result from the expansion, since we're still developing history, is the concept of racial tolerance and intolerance. A race formerly viewed as evil, such as the Drow or Orcs, would clearly face racial discrimination, even slavery. But, as more and more of that race become "civilized" there would be dissent between those who want equality and those who want oppression. Intelligent monsters could soon become normal citizens, in some countries.

Some countries would accept the transition from monster to citizen, while others might abhor the idea. More wars could occur as one side shouts to the other "You're wrong!" This would be fun for yet another adventure, particularly a party with a monster character in it. Also, it could lead to more cross-breeds, even those that one couldn't get away with earlier.

Moving away fro the political and social aspect of expansion in the Realms, we come to the Underdark. With the steam-engine powering robot suits, its' easy to assume that cars and so forth would also be built. Modernization also loves to turn miles of empty wilderness into highways. So now, The Underdark lights up with various gas lamps and the lights of various steam-powered vehicles. Given how dark it is in the caves, bandits would still be common along the roads because this is fantasy. You are now being attacked Fast and furious style. Kidnapping, Sabotage, Hijacking and so much more go on in the world below.

A hub for the criminal underworld forms below the light, where gangs band together on the roads as they run from the law. These gangs could be terrorist Drow who still believe in the old ways, criminals from the surface, Mind Flayers or other aberrations.

And back on the surface, even with the expansion into tribal lands going on, there's still political differences going on between developed nations. Countries with democracies in place might decry those that don't as evil, while the intellectual aristocracies imperialism could cause an elitist attitude. A war could be brewing, but first, you'd need intel. A game of spy vs spy ensues, creating even more adventure opportunities.

Assuming the countries aren't angry at each other, there's inter-state trade. Once the borders expand, there's bound to be interaction with neighbors. Economies are bolstered and immigrants and emigrants flock with their products. A world not unlike ours is born.

If you want to get especially crazy, look up the Analytical Engine. Originally no more than a glorified abacus in our world, the scientists' assistant wrote down notes and ideas of her own. In reality, her ideas were laughed off as ludicrous and shelved until decades later when another inventor used her notes as the basis for our modern computers. In a fantasy world, you could do whatever the hell you wanted.

Thus, the Steampunk Internet is born. Call it whatever the hell you want to. Now, Mass Media rises. Steampunk goes into the information age. But, with the fantasy element still in use, we enter a whole new world of danger: Cyberterrorism. Why? Because the Explosive Runes, Symbol, and Sepia Snake Sigil spells are now able to be sent in a viral e-mail. Eat your heart out, Bruce Willis.

Another thing that surfaces with the rise of Steampunk Internet is acceptance with a variety of deviant lifestyles. So, enjoy your BDSM-loving rogue. I threw this in here on a dare, but hey, it could happen. If you knew what the lifestyle actually was, beyond the whips and chains while you're doing it, it'd be very easy to bring the character to life.

Getting back to what other kinds of fun you could have in a Steampunk genre, I give you TESSSSLLLAAAAAA!!! If you need an excuse for any sort of supervillain-level technology in a game like this, he's your man.

Further reading for SP game includes the following, at your option:

Iron Kingdoms Series- Privateer Press
DragonMech Series- Necromancer Games
Legends and Lairs: Sorcery and Steam- Legends and Lairs
Steam & Steel: A guide to fantasy Steamworks- E.N. Publishing
Past- Wizards of the Coast (d20 Modern supplement)
Dungeon Magazine #149, article: Pulp Heroes- Paizo.com has this; use it for the right flavor if you want to.
Dragon Magazine #321, article: The way of the gun- For some more weaponry.
Dragon Magazine #277, article: the Age of Steam- Further references to good SP fiction, along with a Greyhawk 2000 article that describes Modern-Age fantasy.