Can games/DLC be completely removed from Steam, such that they cannot be redownloaded?

When a game is removed from Steam, if you have it he game in your library, you can still download and play it.

But can they do something that prevents you from ever being able to download it? Like can they remove the game from their servers?

Steam can remove games from their servers in such a way that they're also removed from libraries. For example, Steam has deleted multiplayer games where the servers have gone down permanently. The multiplayer game Order of War has been removed from user libraries on the request of Square Enix after SE took down the servers.

Steam has also in individual cases removed games from user libraries when the payment for those users has been reverted. This sometimes happens with games where the user has bought the game from a 3rd party source, but then the payment for that 3rd party source bounces (which can even happen if the payment that 3rd party source used to acquire the game is charged back, like with stolen credit cards).