The Iotians were a humanoid species from the Beta Quadrant. Their homeworld was Sigma Iotia II, a planet that was described as being in the outer reaches of the galaxy. They were described as highly intelligent and somewhat imitative.
In 2168, the Federation starship Horizon visited Sigma Iotia II at a time when the Iotians were in the beginning stages of industrialization. The visit predated the non-interference directive, and the crew left behind behind a number of technical manuals for items such as radio sets, as well as a book called Chicago Mobs of the Twenties. The latter resulted in severe cultural contamination, to the point of moral inversion, as the imitative Iotians came to pattern their entire society based old Earth gangsters.
Upon approaching the planet, the ship was contacted by Bela Oxmyx, boss of the largest territory on the planet, the Northside Territory. Bela Oxmyx believed that there was too much conflict (in the form of "hits") on his planet. He and a boss Jojo Krako of the Southside Territory made hits against each other, while Krako was also making hits against a boss called Tepo, who also made hits against Oxmyx. Oxmyx hoped the Federation could provide advanced weapons allowing him to take out the other bosses. Spock agreed that if the society did not become united it would degenerate into total anarchy.
After negotiations with several bosses on the surface, Captain Kirk was able to unite the bosses in a unified syndicate with the Federation acting as the supreme authority, to which the bosses had to answer. He left Bela Oxmyx, the Iotian crime boss of the Northside Territory, in charge and demanded an annual cut of 40% for the Federation, promising a ship would be send to collect it yearly.
Unbeknownst to the Iotians, Kirk wanted the 40% was to be put into the planetary treasury and used as a resource to guide the Iotians into adopting a more ethical system of government. He predicted that despite themselves, they'd be forced to accept conventional responsibilities.
After returning to the ship, Doctor Leonard McCoy discovered he had left his communicator behind on the planet. Kirk, Spock, and McCoy all worried that the Iotians would discover transtator technology and make significant advances in a short time. (TOS: "A Piece of the Action")
After cultural contamination, conventional government did not exist and the civilization became organized in territories, each run by an outfit headed by a boss. People were expected to pay "a percentage" in return for which the boss would take care of them. Aggression between these territories, in the form of "hits", appeared to be common.
Technology as of 2268 included cars and trucks, street lights, and fireplugs. They also distilled drinks. Firearms were ubiquitous. Timepieces also existed, and timekeeping utilized units like years, weeks and hours. A postage-based system for sending letters existed at least in the Northside Territory. Clothes made of nice material cost a bundle. Foods available included meat, produce, and apples.
The book which had caused the cultural change, Chicago Mobs of the Twenties, was treated with Bible-like reverence by the Iotians. They referred to it simply as "The Book" and did not tolerate disparaging remarks about it.
Recreational activities included Pool, Pinball, and card games. Iotian names tended to consist of two parts, the last one which might be used as shorthand. Iotians were not above employing double negatives. (TOS: "A Piece of the Action")
Though they had been visited by extraterrestrials as early as the mid-22nd century, the Iotian leadership appeared to have no concept of their place in the wider galaxy.
While government in the classical sense apparently did not exist and bosses apparently ruled sovereign, boss Krako boasted that he had never been arrested in his life, and upon being captured by the Enterprise crew complained that he had rights. On at least one occasion, an Iotian referred to the Enterprise away team (which had presented itself as representing the Federation) as the Feds.
According to Star Trek: Deep Space Nine Companion (p. 384), the original idea for celebrating Star Trek's 30th anniversary in Star Trek: Deep Space Nine was to have Benjamin Sisko and his crew return to Sigma Iotia to find the Iotians imitating the original series crew. It would have been a tongue-in-cheek reference to the 'typical' Star Trek fan. The idea was dropped in favor of what became "Trials and Tribble-ations".
According to The Worlds of the Federation, the Iotians made use of the inner workings of McCoy's communicator to learn transtator-based Federation technology. By the time a next starship arrived to the planet, the Iotians had built a Federation starbase-like installation in orbit and were all wearing Starfleet uniforms. By the 24th century, the planet had become a Federation protectorate with a rating of E+ on the Richter Scale Of Cultures and, though it was not quarantined, required all personnel to be cleared through an orbital customs facility before visiting the surface.