iOS is quite capable of talking to devices on a Wi-Fi network that does not provide IP infrastructure (like DHCP). The presence of the exclamation point in Settings > Wi-Fi does not preclude networking over the Wi-Fi interface. The only major restriction is that you have to manually join the Wi-Fi network; iOS won’t auto join a ‘broken’ network like this.
As to what’s actually going wrong, it’s hard to say based on the info presented so far. My recommendation is as follows:
getifaddrsto confirm that the Wi-Fi interface is up and has the correct address assigned
Try connecting to your device, using an RVI packet trace to see what’s happening on the ‘wire’
For information about RVI packet traces, see QA1176 Getting a Packet Trace.
Quinn “The Eskimo!”
Apple Developer Relations, Developer Technical Support, Core OS/Hardware
let myEmail = "eskimo" + "1" + "@apple.com"