What's "an IoT"?

Same as always, it depends on what you are doing. As soon as you have a non-trivial display, data-processing needs, anything involving video or expectations of expanding features later, going to an MCU is a serious compromise and/or additional expense during development at best.

Does it make sense to put a Linux system in a light bulb? very likely not. Does it make sense making your product harder to use and dependent on a Linux server somewhere else just so you can avoid using a system powerful enough to do on-board data processing and get away with an MCU? Also probably not. I see plenty companies learning how to do embedded Linux because their purely microcontroller-based designs don't cut it anymore for what they want to do today.