Systems like this are all over. Almost every IoT device is an example. More seriously, networking hardware is in this category. You can’t make connectivity to networking hardware depend on a working network with Internet access to obtain certificates without introducing a circular dependency and the possibility of making it very hard to recover from downtime.
As a result, security of network control planes is often abysmal.
To be clear, the solution above requires no incoming access. Its 100% client, there's no server access. (Client to the DNS Api, client to ACME.
If the device does not have client access to anything then the certificate can be obtained from another device. You would then need some mechanism to put the certificate on the device.
I agree that IoT devices are problematic, they either need client access to the Internet (which most don't get) or they need to run a "server" of some kind to receive the certificate updates. If you're lucky this could be automated.
Such things use ssh rather than TLS, or should.
The other "bonus" is that due to CT it leaks the internal name to basically everyone on the internet. It may or may not be a problem but definitely something to be aware of.
Actually it's possible to use the CA system on a closed LAN.
A) register a domain. For example company-lan.com.
B) assign each server on your Lan with a name and (local) address. Eg, daisy.company-lan.com, resolving to say 192.168.1.1
Clearly this address is only useful when used inside your lan.
C) provision certificates for this address using the DNS-Challenge approach rather than the HTTP-challenge approach.
(Bonus tip; using a DNS provider with a good API makes the process automateable).