The Internet of Things (IoT) is the interconnection of uniquely identifiable embedded computing devices within the existing Internet infrastructure. Typically, IoT is expected to offer advanced connectivity of devices, systems, and services that goes beyond machine-to-machine communications (M2M) and covers a variety of protocols, domains, and applications. The interconnection of these embedded devices (including smart objects), is expected to usher in automation in nearly all fields, while also enabling advanced applications like a Smart Grid.
Things, in the IoT, can refer to a wide variety of devices such as heart monitoring implants, biochip transponders on farm animals, automobiles with built-in sensors, or field operation devices that assist fire-fighters in search and rescue. Current market examples include smart thermostat systems and washer/dryers that utilize wifi for remote monitoring.
According to Gartner, there will be nearly 26 billion devices on the Internet of Things by 2020. ABI Research estimates that more than 30 billion devices will be wirelessly connected to the Internet of Things (Internet of Everything) by 2020. As per a recent survey and study done by Pew Research Internet Project, a large majority of the technology experts and engaged Internet users who responded—83 percent—agreed with the notion that the Internet/Cloud of Things, embedded and wearable computing (and the corresponding dynamic systems ) will have widespread and beneficial effects by 2025.It is, as such, clear that the IoT will consist of a very large number of devices being connected to the Internet.
Integration with the Internet implies that devices will utilize an IP address as a unique identifier. However, due to the limited address space of IPv4 (which allows for 4.3 billion unique addresses), objects in the IoT will have to use IPv6 to accommodate the extremely large address space required.      Objects in the IoT will not only be devices with sensory capabilities, but also provide actuation capabilities (e.g., bulbs or locks controlled over the Internet). To a large extent, the future of the Internet of Things will not be possible without the support of IPv6; and consequently the global adoption of IPv6 in the coming years will be critical for the successful development of the IoT in the future.    
The embedded computing nature of many IoT devices means that low-cost computing platforms are likely to be used. In fact, to minimize the impact of such devices on the environment and energy consumption, low-power radios are likely to be used for connection to the Internet. Such low-power radios do not use WiFi, or well established Cellular Network technologies, and remain an actively developing research area. However, the IoT will not be composed only of embedded devices, since higher order computing devices will be needed to perform heavier duty tasks (routing, switching, data processing, etc.). Companies such as FreeWave Technologies have developed and manufactured low power wireless data radios (both embedded and standalone) for over 20 years to enable Machine-to-Machine applications for the industrial internet of things.
Besides the plethora of new application areas for Internet connected automation to expand into, IoT is also expected to generate large amounts of data from diverse locations that is aggregated and very high-velocity, thereby increasing the need to better index, store and process such data.
Diverse applications call for different deployment scenarios and requirement, which have usually been handled in a proprietary implementation. However, since the IoT is connected to the Internet, most of the devices comprising IoT services will need to operate utilizing standardized technologies. Prominent standardization bodies, such as the IETF, IPSO Alliance and ETSI, are working on developing protocols, systems, architectures and frameworks to enable the IoT.
Read more : http://en.wikipedia.org/wiki/Internet_of_Things