This paper discusses the potential of the Internet of Things (IoT) paradigm in the context of assisted living for elderly and fragile people, in the light of the peculiar requirements of such users, both from a functional and a technological perspective. We stress some aspects that are often disregarded by the technical community, such as technology acceptability and usability, and we describe the framework and the phases of the current co-design approaches that imply the active involvement of the final users in the system design process. Thereby, we identify a series of design practices to merge technical and fragile people's requirements. The discussion is backed up by the description of DOMHO, a prototypal IoT-based AAL system that embodies most of the concepts described in the paper, and that is being deployed and tested in a shelter house for elders, and in an apartment for the co-housing of individuals with disabilities. Finally, we discuss the potential and limits of the current approaches and present some open challenges and future research directions.