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Internet of Things (IoT) is an integration of the Sensor, Embedded, Computing, and Communication technologies. The purpose of the IoT is to provide seamless services to anything, anytime at any place. IoT technologies play a crucial role everywhere, which brings the fourth revolution of disruptive technologies after the internet and Information and Communication Technology (ICT). The Research & Development community has predicted that the impact of IoT will be more than the internet and ICT on society, which improves the well-being of society and industries. Addressing the predominant system-level design aspects like energy efficiency, robustness, scalability, interoperability, and security issues result in the use of a potential IoT system. This paper presents the current state of art of the functional pillars of IoT and its emerging applications to motivate academicians and researches to develop real-time, energy-efficient, scalable, reliable, and secure IoT applications. This paper summarizes the architecture of IoT, with the contemporary status of IoT architectures. Highlights of the IoT system-level issues to develop more advanced real-time IoT applications have been discussed. Millions of devices exchange information using different communication standards, and interoperability between them is a significant issue. This paper provides the current status of the communication standards and application layer protocols used in IoT with the detailed analysis. The computing paradigms like Cloud, Cloudlet, Fog, and Edge computing facilitate IoT with various services like data offloading, resource and device management, etc. In this paper, an exhaustive analysis of Edge Computing in IoT with different edge computing architectures and existing status are deliberated. The widespread adoption of IoT in society has resulted in privacy and security issues. This paper emphasizes on analyzing the security challenges, privacy and security threats, conventional mitigation techniques, and further scope for IoT security. The features like fewer memory footprints, scheduling, real-time task execution, fewer interrupt, and thread switching latency of Real-Time Operating Systems (RTOS) enables the development of time critical IoT applications. Also, this review offers the analysis of the RTOS's suitable for IoT with the current status and networking stack. Finally, open research issues in IoT system development are discussed.