IoT is an advanced automation and analytics system that uses networking, sensing, big data, artificial intelligence technology to create a complete product or service. With IoT, this interconnection of various devices via the internet enables them to send and receive data.

Key Features

1. AI: This makes the system smart for interaction.
2. Connectivity: IoT establishes networks between the small devices
3. Sensors: sensors enable IoT devices for real-world integration
4. Active Engagement: The data transmitted through sensors is continuously updated and hence leads to active engagement with the AI tools
5. Small Devices: Devices have become smaller and cheaper over time. IoT uses these purpose-driven small devices for precision and scalability. 

IoT Advantages

1. Improved Customer engagement: IoT enables a much healthier avenue for customer engagement due to the various data points.
2. Technology Optimization: We could put the machines for best uses as well as better monitor our current resources.
3. Reduced Waste: Data collected can be much more channeled hence also helping prevent data spillage.
4. Enhanced Data Collection: With the multiple devices in use for IoT, the collection of data becomes much easier and at a much larger scale.

IOT disadvantages

1. Security: Data is prone to attacks due to the various connection points. Hence all data must be encrypted.
2. Privacy: Personal user data can be exploited for commercial gains.
3. Complexity: Complexity of the system increases with increased devices and data.
4. Compliance issues 

IoT Hardware

IoT hardware consists of a remote dashboard, devices for control, servers, routing devices, and sensors. These devices manage the key tasks required for the functioning of an IoT system. Major ones among them being

1. IoT sensors: These include the accelerometer, gyrometer, magnetometers, etc.
2. Wearable Electronics: All smart wearables capable of recording data and transmitting it come under this category. This includes smartwatches, clothing, glasses, shoes, etc.
3. Other standard devices: These are the devices responsible for the control of the system remotely and serve as the command center. This includes desktop, tablets, and phones.

IoT Software

IoT software is responsible for data collection, device integration, analytics, and smart application. They do this on the related hardware that includes embedded systems, partner systems, and middleware. The IoT software can lie in any of the following categories:

1. Data collection: Software manages the data and is responsible for data collection, integration, and data security. It uses certain protocols for this. This data is transmitted to a central server
2. Device Integration: This forms the backbone of the IoT system. The software here allows necessary cooperation and networking between the IoT devices
3. Real-time analytics: The data collected is analyzed, interpreted using Machine Learning and advanced tech to bring actionable insights.
4. Applications: This enables the IoT system to perform predefined tasks on different devices to put the IoT system into perspective.