A network that handles a laptop and a television without difficulty can slow noticeably once smart plugs, sensors and cameras are added. Device count, not total speed, is the constraint.
Airtime is the resource being shared
Wi-Fi permits one transmission at a time on a given channel. Every device waits for a clear moment, sends, and then yields.
The quantity being divided is therefore time, not bandwidth. A router advertising very high speeds still has only one channel's worth of seconds to allocate.
As device count rises, the waiting portion grows faster than the transmitting portion, which is why performance degrades before the connection is anywhere near saturated.
Slow devices consume disproportionate time
A sensor connecting at a low data rate occupies the channel far longer to send the same amount of information than a modern device would.
Distance and interference push devices to lower rates automatically, so a poorly placed device is not merely slow for itself. It slows everything sharing its channel.
This is the central reason a handful of cheap devices at the edge of coverage can affect a network that appeared to have capacity to spare.
Overhead grows with population
Beyond user data, networks carry management traffic: beacons announcing the network, discovery requests from devices looking for each other, address resolution and keepalive messages that hold connections open.
Much of this is broadcast, meaning every device must receive and process it whether or not the message concerns them. The overhead therefore scales with the number of participants rather than with how much anyone is actually transferring.
Smart home devices are unusually chatty in this respect, because discovery protocols repeat announcements so that newly arrived controllers can find them. A house of idle devices still generates continuous background traffic.
Routers have finite client tables
Each connected device occupies an entry in memory holding its address, encryption state and queued traffic. That table is sized during design and is not unlimited.
Consumer hardware is specified for a modest number of active clients, and behaviour past that point tends to be erratic rather than gracefully degraded.
Symptoms include devices dropping and reconnecting in cycles, which generates further management traffic and compounds the original problem.
Splitting the load is what actually helps
Separating devices across frequency bands gives them independent airtime pools, so slow sensors on one band stop competing with high-throughput devices on another.
Additional access points on different channels achieve the same effect spatially, provided they are wired back rather than repeating wirelessly.
A repeater retransmits everything it receives, consuming airtime twice, which is why adding one often makes a congested network worse rather than better.