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Early IoT applications
Early IoT applications were much like the old mainframe and dumb terminal computing architecture. In these applications, remote sensors send basic data to a computer through an internet- (cloud-) connected microcontroller.
The following diagram shows an IoT application using a temperature sensor and an ESP8266 internet-connected microcontroller:
As you can see, the thing in the IoT application does nothing more than read the temperature. The ESP8266 microcontroller passes the sensory data along to a web service using the internet (cloud). The processing of sensory data is done by a computer or a series of computers on the other side of the cloud.