Iron is just one of the micronutrients daylilies (plants) need, there are others. If you read say for example all the things in Miracle Grow fertilizer, everything beyond the N-P-K is basically the micronutrients thats needed.
Yes lack of or too much of iron can affect bloom color. Too high of soil Ph can cause color issues as well as bloom size, bud count, etc because the plant isn't getting everything it needs to produce healthy blooms, foliage, growth.
Just like people, plants need vitamins and minerals. Some places have it in the soil naturally, but usually things need to be added or given.
