A dedicated server is needed because something needs to keep a catalog of the smart devices available on your network and ideally be accessible to many people in one household. You could make a system that went phone -> device but you would need to set up each device on each phone you wanted to use, which isn’t a great user experience. You could also run into issues where devices would need to handle multiple conflicting commands from different users coming in at once. Since smart devices are usually trying to use as little power as possible, that extra complexity would hurt you in that department. The third reason is that having a separate server enables automated workflows that would depend on an always online server that orchestrates multiple devices. For example, let’s say you have some automatic insulating blinds, a smart thermostat. You want to raise and lower the blinds to maximize your energy efficiency. Since you have the dedicated server, that server can check the temperature set point of your thermostat, current weather, and sunrise\sunset times. If it’s sunny out, and your set point is higher than the outdoor temperature, the server can raise the blinds to let warm sunlight in, and vice versa. If only your phone could control the devices a workflow like this couldn’t work when you were out of the house.