Should I mention a failed/unsuccessful entrepreneurship on my resume to account for a 2 year career gap? If so, what are some best practices?

Yes, list the company on your resume. Your revenue and client list are nobody's business, so don't mention them. Focus on what you learned and what you demonstrated you are good at. In a cover letter, I would include that this foray into entrepreneurship has taught me what I value in a full time job, and then list some of those things. There is nothing wrong with wanting stability and support, enjoying coworkers, and seeing a chance to make a bigger impact as part of a team than you can alone.

If someone asks you why you are looking for work when you have a business, repeat what you said in the cover letter. Not what you didn't like about running the business, but what you look forward to in this job. And of course, what you will bring to it.

I would not mention either the health or family issues. That's just giving them a reason not to take a chance on you. Plenty of people without health and family issues realize that running a company is very different from being employed, and that they prefer being employed. This isn't a defect in yourself that you need to hide or explain.

Yes, list the company on your resume.

It's an important experience during which you learned many things. List the company, list some projects you worked on. If you really didn't have any client, maybe you still had a vitrine project that you did for free? List that project.

Reflect on everything that you learned, both technical skills from your line of work, other skills from entrepreneurship, and soft skills, and list those skills on your resume as well.

Do not write "failed" or "unsuccessful" on your resume, and do not use these words in interviews. It might feel like a failure to you, but that's not how you should frame it in a job interview. And even if it failed, it didn't fail because of your lack of skills in embedded software development or in medical devices, did it? Presumably it failed because of the lack of clients. Finding clients is hard. It is another job entirely and not the one you'll be applying for, is it? So don't frame this experience as a failure.

However: if you're looking to become an employee and stop being an entrepreneur, then make that very explicit on your resume. If you've already stopped being an entrepreneur, then make that very explicit in your resume. Make it clear and explicit to your potential next employer that you want them to be your next employer, not your next client. It might be obvious to you, but it won't be obvious to them, and if you don't make it clear, your potential future employers might be scared off if it looks like you are planning to keep developing your business instead of being a fully devoted employee.

I suggest you leave it out or describe it as self training for a couple of reasons.

Firstly any knowledge and skills you purport to have didn't actually translate to clients or business in 2 years or whatever it was. So they're suspect if mentioned in that context.

Secondly entrepreneurs come with a potential weakness to many experienced people, they may be incompetent or they may be using you as an interim revenue source while they chase their next venture, or maybe they're chasing a venture right now and just need money to live on while it hopefully gets off the ground.