I think this tries to do two things which really should be separate things.

In my opinion, handling of files should really be just handling of files, with os.Stdin not classifying as such. Part because from the perspective of SOPS as an SDK, decrypt.Decrypt magically reading from os.Stdin would be kind of surprising.

Having said this, I would deal with - as a special path case within commands, and e.g. create another wrapper around DataWithFormat for an io.Reader.

files should really be just handling of files

I don't know. On Unix, stdin is just an other file descriptor and could be handle as file, too. (like /dev/stdin)

Living the unix philosophy, there should not be a difference between /mnt/file and /proc/self/fd/1.

From technical point of view, it may should fine.

Creating an other wrapper, it possible. But the other wrapper would be the exact same copy/paste code.

How is this the same copy/paste code?

func Reader(r io.Reader, format string) (cleartext []byte, err error) {
        encryptedData, err := io.ReadAll(r)
	if err != nil {
		return nil, err
	}
	return DataWithFormat(encryptedData, FormatFromString(format))
}

NB: I am fine with a function called ReadContent (or something something) existing (and utilized) within cmd/sops, but I wouldn't want this to be the default for decrypt.