Here's How To Permanently Delete Games From Your Cluttered Steam Library
Simply deleting the game from your PC won't rid your Steam account of the offending game's title. No, it still sits there as if to say, 'Hey sucker, remember when you purchased me and thought you were getting a bargain? Joke's on you, fella! Here I am, come play me!' For some, Batman: Arkham Knight might come to mind (don't forget you can get a refund). Of course, there are other reasons why you might want to delete a title, like lack of support or simply because you've exhausted all it has to offer.
In any event, to nuke a game from your catalog, load up Steam. Now go to Help > Steam Support. You'll see a list of recently played games here. If one of them is what you're trying to delete, click on it and select "I want to permanently remove this game from my account."

If the title you want to remove isn't among the list of recently played games, click on Games, Software, etc. and search for the game you want to remove, then delete it as laid out above.

Steam will ask you to "carefully review" your decision, because once it's gone from your library, it's gone for good -- you no longer own the title. However, you will still need to uninstall the game from your PC, if you haven't already.
There are a couple of things I should point out here. Yes, that's an AOL account for my Steam ID. I've been a Steam user for a long, long time, and though I haven't used that email in almost nearly as long, unfortunately Valve still hasn't figured out a way to let users change their Steam ID (*shakes angry fist at Valve*).

Secondly, if you're simply looking to clean up a cluttered library of games in Steam without giving up ownership (or whatever you want to call it -- EULAs make ownership a messy subject), you can hide games instead. To do that, go to your games library, right-click the title you want to hide, select Set Categories... and check the "Hide this game in my library" box.
To bring a hidden game back. go to your games library once again. See the search bar up top? It probably says Games on the right side. Whatever it says, click on it (it's a pull-down menu) and select Hidden. This will bring up a list of your hidden titles. Right-click whichever one you want to add back to your library and select Set Categories... and then uncheck the "Hide this game in my library" box.