You have a finished product that you released to the public. That's further than most ever get and shouldn't be considered a "failed" startup. Display it proudly.

Just be honest in the interview. If it failed, say that it failed. Admitting you are lacking in some aspects doesn't sound bad at all.

You might or might not put that into your resume.

I would put any factual evidence of skills / experience gained into your resume, the fact that it succeeded or failed is irrelevant and should be left out and brought up in the interview as required.

Say you failed, but what you learned for the experience.. Recruiters don't really care what you did, but how you did and what you learned for it.

This may sound a little counter-intuitive, but failed startups are great! Going through the process of failing is one of the most valuable learning experiences, and employers recognize that. Be honest when discussing it. Talk about the mistakes you made, what you learned, and how it's made you a better engineer.

Focus on whatever positive things came from that experience and how those things can benefit a potential employer.

I echo this statement. Don't forget to specifically identify experiences from your start-up that are applicable to the job you're applying for (sales, project management, coding, etc).

You should be proud on your start-up. A startup experience may have exposed you to all aspects of a project workflow and not just limited to technical/design sight of it. Let your interviewer know those points and it could work well in your favour.