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The Internet of Things (IoT) will be ripe for the deployment of novel machine learning algorithms for both network and application management. However, given the presence of massively distributed and private datasets, it is challenging to use classical centralized learning algorithms in the IoT. To overcome this challenge, federated learning can be a promising solution that enables on-device machine learning without the need to migrate the private end-user data to a central cloud. In federated learning, only learning model updates are transferred between end-devices and the aggregation server. Although federated learning can offer better privacy preservation than centralized machine learning, it has still privacy concerns. In this paper, first, we present the recent advances of federated learning towards enabling federated learning-powered IoT applications. A set of metrics such as sparsification, robustness, quantization, scalability, security, and privacy, is delineated in order to rigorously evaluate the recent advances. Second, we devise a taxonomy for federated learning over IoT networks. Third, we propose two IoT use cases of dispersed federated learning that can offer better privacy preservation than federated learning. Finally, we present several open research challenges with their possible solutions.