Yes they can be. However, if you want to use a compatibility layer with them like proton the game files have to be stored in exFat (Linux file system format) format. If you have them on a drive formatted for NTFS (windows file system format) the game won’t start and wont give you errors. Games with native versions will run fine from a NTFS partition.

So currently my backups are on my media server which is ext4. These would be moved to my gaming system when I wanted to install them. I would just need to make sure that was formatted in exfat for this to work?

No, in that case you’re fine. Exfat is really only good for shared drives. Just use the default of your distribution.