MacBook Air won't get IP from Tenda 11n DHCP server
I then tried to add the laptop to the router's static DHCP assignment list.

This has changed something. Although it would still not connect, I was now able to see the laptop in DHCP client list, but with a blank host name.

This made go and check my laptop's "Computer Name", which was something like "John's MacBook Air" in Preferences/Sharing, which resulted in auto-generated NetBIOS name like "MACBOOKAIR-CB8C" in Preferences/Network/Advanced/WINS

As soon as I changed "Computer Name" to something simple like "JM Air", it connected to router's WiFi.

I have now tried to disable WiFi, and change the computer name to something as obnoxious as it previously was. It did not break anything, surprisingly.

I am still not sure why changing "Computer name" fixed this problem, but I found the problem quite annoying and there was no solution anywhere. So please enjoy.