In general, you connect the IOT device to your home WiFi (possibly via a hub, if the device doesn’t speak WiFi natively, for example, ZigBee or ZWave devices). In many cases, that device then talks back to a cloud server on the Internet, where they will link the device to you in some way, typically using an account in an app on your phone. You can then use the app on your phone to instruct the cloud service to instruct the IOT device to do something (turn on/off, set a thermostat, etc), or view sensor readings (temperature, state, camera feed, etc).
This let’s you access the device whether you are at home or out and about, but it does come with a downside, in that if your internet connection is not working, neither is your IOT device! Another potential downside is that as you add more diverse devices, you can end up with multiple apps and multiple accounts, and no single place to manage all of them, unless you buy into a single ecosystem. Additionally, should the vendor decide to discontinue support for the device, you’re out of luck, and have to discard it, even if it was working perfectly.
There is an alternative option, where you run the “cloud” server yourself at home, using a cheap computer like a Raspberry Pi, Intel NUC, or similar, and all the control resides in your own hands. This means that your smart home is no longer (fully) dependent on a working internet connection, so long as you purchase products that have a “local control” option. Projects like Home Assistant are making this easier and easier, and there are options for accessing your home server from the Internet should you want that. This also means that you have a single dashboard for all your devices, regardless of manufacturer or ecosystem, and you are not at the mercy of a manufacturer who decides when a device needs to be replaced or obsoleted.
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