Consumer routers do have this feature, but usually it's software-limited to single additional VLAN and called "guest network". It would be trivial to add an option for dedicated "IOT network".
Even the cheapest $20 routers are actually quite capable in terms of hardware, supporting at least 16 VLANs.
Except that many IOT devices require you to be in the broadcast domain for control and discovery....
e.g. with LIFX wifi light bulbs, you can control them with low latency (and no internet connection) via ip packets; or high latency via LIFX's cloud servers if you're not in the same subnet.
Are they using broadcast packets, or is it multicast and enabling multicast routing on your home network fixes the problem (you might need a mangle rule to bump up the TTL)
Even the cheapest $20 routers are actually quite capable in terms of hardware, supporting at least 16 VLANs.