This paper explores the relationship between two emerging technologies, WebAssembly (Wasm) and the Internet of Things (IoT). It examines the complementary roles of these technologies and their impact on modern web applications. First, it delves into the capabilities of Wasm as a high-performance binary format that allows developers to leverage low-level languages for computationally intensive tasks. Second, it seeks to explain why integration of IoT and Wasm is important. Third, it discusses the strengths and limitations of various tools and tool chains that are crucial for Wasm development and implementation, with a special focus on IoT. Fourth, it presents the state-of-the-art with regard to advances that combine both technologies. Fifth, it discusses key challenges and provides future directions. Lastly, it provides an in-depth elaboration of the future aspects of Wasm, with a strong focus on IoT, concluding that IoT and Wasm can provide developers with a versatile toolkit that enables them to balance productivity and performance in both web and non-web development scenarios. The collaborative use of these technologies opens up new possibilities for pushing the boundaries of web application development in terms of interactivity, security, portability, scalability, and efficient computational capabilities. As web and non-web embeddings continue to evolve, the integration of IoT and Wasm will play a crucial role in shaping the future of innovative application development. The key findings of this extensive review work suggest that existing tool sets can be easily conglomerated together to form a new era in WebAssembly–IoT infrastructure for low-power, energy-efficient, and secure edge–IoT ecosystems with near-native execution speed. Furthermore, the expansion of edge–IoT ecosystems can be augmented with prospective cloud-side deployments. However, there remains a strong need to more cohesively advance the amalgamation of Wasm and IoT technologies in the near future.