I personally have a Sonos soundbar, which connects to the digital output of my TV. The soundbar then connects to my home router (either via wifi or ethernet).

Then I connect my subwoofer and 2 surrounds to the same router. And the soundbar distributes the relevant audio channels over wifi.

In this scenario, the soundbar is your 'small router-sized device', however it's the size of a sound bar..

I can't fault the sound of the system as a whole. I think it sounds great.