Why is PoW on IoT devices is a fundamental mistake?
Your question can be answered with a simple question: "Why?". That PoW inherently has no benefit, and what you consider a IoT device (if the claim from someone else is true) has nothing to do with IoT.
https://en.wikipedia.org/wiki/Philosophical_burden_of_proof:
When two parties are in a discussion and one makes a claim that the other disputes, the one who makes the claim typically has a burden of proof to justify or substantiate that claim especially when it challenges a perceived status quo.
You made a claim (that PoW in IoT is a mistake), I expected you to prove it. Could you expand your proof to make it more convincing?