Nicely explained @yabapmatt - when I first saw the Steem Monsters announcement I knew I had to support this project, because as a developer seeing this kind of stuff being built on Steem exciting. And as someone who obsessively collects things (like unique Australian $2 coins) it taps into that "Pokemon" collecting part of my brain.

In my experience always attempting to make everything completely decentralised on the blockchain comes with disadvantages. As you have seemingly have discovered, there are ways to maintain a separate database of data and then write into the blockchain, I guess technically you could call a database + blockchain combination a centralised sidechain.

I've been working on a project for Steem which will use the blockchain to write certain operations into the chain as well as read, but for other inconsequential data, it'll be encrypted in spread out MongoDB instances. The data won't be accessible to anyone other than the user who use their private key to unlock the data. It doesn't give you the ultimate redundancy that a decentralised blockchain does, but the chances of the fallback instances I have in different regions all going down is very unlikely.

You should make these technical deep-dive posts a frequent thing because it's insightful. And as someone who is building applications on the Steem blockchain myself, the shared knowledge helps with things I and others are also building.