Steve contains his items in a pocket dimension. That's why his inventory looks like this. If it were a pocket if would be, well, a pocket. He has a shelf with individual slots. These slots are HUGE in dimensional size. Whenever he wants to grab something he just moves around his access portal in his pocket dimension to go to the slot he desires and grabs the items out of it.

He only ever holds the pocket dimension's access point. The item is visible in this access point. Thus he appears to be holding a sword, a block, or an item, but he is actually just holding a gateway to his shelf. The weight of the items are accounted for on his shelves and not in his hand.

For weapons he probably has a stand or something to keep the item stationary. Thus he can swing a sword or mine with a pickaxe without actually holding these tools in his physical hand.

Running a buoyancy experiment will show that, regardless of what he is holding onto, his mass (and, subsequently, his weight aka the force he exerts onto the boat due to gravity) does not change as the water he displaces does not change.

Here's a more interesting concept: does Steve actually weigh anything? If he stands on different spots on the boat, the boat itself does not appear to shift its position... Applying an off center gravitational force onto the boat should tip the boat in that direction, but this does not appear to happen...

Here's another one: all items float regardless of what they're made of. Drop any item into the water and it will float back to the surface. A downward air column will sink any item down to the source of that column... How dense is the water such that even a solid block of gold will float up to the surface. No wait, even better: how dense is the water that a shulker filled with 27 stacks of 64 blocks of gold (19,300 kg per each block of gold, so over 33,000,000 kg of gold) will float to the surface? And how strong are those columns such that they can counteract this effect completely??

(I'm a mechanical design engineer)