There are a variety of interesting small-ish RTOSs out there for IoT SoCs and devices. Most of these are are significantly smaller-footprint than a full Android implementation.

BUT the 64MB RAM target they are aiming for could be reached by a "headless" variant of Android. The Android runtime does a lot of interesting things to minimize memory use and power consumption. Android's installable service components could make updatable, highly flexible IoT nodes realistic.

In the context of the (scant) facts in the article, it does make sense.

It doesn't make sense if you think of an IoT node having only a few kB of program memory, a sensor io link, and a Zigbee radio. These ain't going to be $2 nodes.