Getting technical - the way I see it, the problem arises from a combination of three things - sensors/access, Internet access, and source of software/authority.

Sensors/access is unavoidable, otherwise the device doesn't actually do anything useful. The point is it sets the scope for what the device is able to affect. When people say "set up a separate IoT VLAN" (that still has Internet access) this is basically what they're addressing - how a device can access other devices they may care about more.

Internet access is the catalyst that's created this whole dumpster fire - I don't care about the proprietary software on my keyboard/mouse/UPS/monitor/GPU/etc to nearly the same extent. I've got some TP-Link plugs that I control local network only. They don't get Internet access, so no updates, telemetry backhaul, etc.

The authority to update/configure/change that software is the crux. With proprietary software, there are no cuddly kittens period. Here we've got a case of a "legitimate" company choosing to be a bona fide attacker to increase their bottom line! The harm was exacerbated by a bug causing it to run amok, but even without the bug they are deliberately violating trust.

But even libre software can fall to security holes as well. Meaning you want to centralize the attack surface as much as possible, for administration's sake of keeping updated. "Internet" of things is basically the direct opposite of this - postulating many illegible fine-grained links between devices on different networks. Whereas really need more like the Home Assistant model, where peripheral devices may communicate over the network, but it's only ever over the local network. Think how ethernet is set up when used in industrial control networks (or at least how it should be set up, hehe).