Diagnosis
The setup handshake between your phone and the camera is failing. This is almost always because the phone is connected to the wrong Wi-Fi network during the process.
How to Fix It
When you're at the "Connect device to your network" step, the app must switch your phone's connection to the camera's own temporary Wi-Fi signal (it'll look like "Tapo_Camera_XXXX"). If it doesn't switch automatically, you need to do it manually. Go to your phone's Wi-Fi settings, forget your home network, and manually select the Tapo camera network. Then go back to the Tapo app to continue.
If That Didn't Work
Some phones have a "Smart Network Switch" or "Auto-Join" feature that fights this process. Go to your phone's Wi-Fi settings for your home network and temporarily turn off "Auto-Join." Also, ensure your phone's mobile data is turned OFF during setup to prevent it from jumping networks.
Heads Up
The camera only works with 2.4GHz Wi-Fi. If your home network has a single name (SSID) for both 2.4GHz and 5GHz bands, your router might be steering the camera to the 5GHz band, which fails. You may need to temporarily split your Wi-Fi bands into separate networks for setup.