With that hashtag you would categorize the word together with LOL, ROFL, YOLO.
But it means more than that.
#IoT stands for The Internet of Things and Wikepedia tells you that:
The internet of things (IoT) is the network of physical devices, vehicles, buildings and other items—embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data.
So as you figured out #IoT better matches with #SmartCity than with LOL.
To explain the concept a bit more, there is a 90 second video topping this blogpost.
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