Making casual users create their own root certificates sounds like an even worse problem. Now an attacker isn't restricted to impersonating your lightbulbs. They can impersonate any domain if they can get your private CA. Now imagine if an IoT vendor engages in questionable practices like creating the CA for you and the user only has to download an exe that automatically installs the root certificate. The benefit for the vendor would be that all devices you order from their website would be shipped with correctly signed https certificates. Later a hacker dumps the database with root CAs and uses it to impersonate your bank.

That’s why self-signed and "local signed" should be distinct concepts, IMHO. The .local domain is already special cased, and could provide a different UI path more akin to how SSH works. AFAICT, you can’t get a https cert for a .local domain, so it’d not break existing https security model. It’d provide a more secure way for apps like syncthing to provide a secure local UI as well. Getting browsers to accept my self-signed certificate is a pain and makes people just use http.