Avatar: The Last Airbender utilizes the classic four elements of air, water, earth and fire to craft a mythology that ably stokes fans' imaginations. When comparing the characters of the franchise and deciding who would win in a duel, there are many factors to consider that are crucial to the fight. How far apart do combatants start? From which point in the series are we considering a character's abilities?
But one question always gets overblown to become more important than it is. And the answer is, no -- the environment does not really matter that much.
It's obvious that surrounding elements can make or break the outcome of a fight in fringe scenarios. The sea-locked prisons that held earthbenders like Tyro or Ghazan are perfect examples of when a bender is deprived entirely of their element, but such situations would be asinine to imagine if a fan were wanting to gauge Tyro or Ghazan's abilities in a theoretical battle against a bender of a different element. If you're wondering who could beat Superman in a fight you don't suppose the fight takes place in a cave filled with kryptonite, do you?
But rather than suppose a fairly advantaged fight on either side, too often, questions of setting interrupt theoretical matchups in Avatar fandom. This most commonly occurs with waterbenders, where the supposition is that a great supply or dearth of nearby water completely changes their ability to win.
At first glance, the line of thinking seems to make sense, given that the greatest showings of waterbending in the franchise often came surrounded by a large supply of ammunition for the fighter: Pakku slicing tanks apart at the North Pole, Katara pushing away battleships in the ocean, or Korra creating a multistory glacier to entrap Kuvira's mech all come to mind.
But how often did the availability of water ever actually impact the outcome of a fight in the series? Most waterbenders carry skins of water that provide them with plenty of the element to bend, and most occasions involve some supply of water nearby that provides sufficient but not overwhelming force to hold their own. The Crystal Catacombs, the Tree of Time and the Wulong Forest were all locations where ample water was available but waterbending did not prevail over every other element because of it. Indeed, all elements seemed equally useful in all locations.
An additional factor of environment that comes up for waterbenders arises for firebenders as well, inasmuch as fans recall the finale of the original series' first season and the emphasis it placed on the former being stronger at night while the latter grows stronger during the day. While the sun/moon factor would occasionally crop up -- such as the full moon being necessary for the art of bloodbending introduced later -- it seems all but forgotten about throughout much of the series. Indeed, there are plenty of counterexamples.
Katara raising a wall of steam and creating a tidal wave in broad daylight during "The Awakening" is considerably more impressive than any waterbending she performs during the full moon of "The Southern Raiders." Roku and his waterbending instructor wield even larger masses of water in "The Avatar and the Fire Lord" during the daytime. Indeed, the influence of nighttime never came up throughout Republic City's pro-bending matches and firebenders like Mako and P'li seemed equally effective during nighttime raids as they were during daytime duels. The influence of the sun or moon on a match rarely never comes up in the franchise at all.
In most Avatar fights, the power and skill of the combatants matter far more than the environment, and if anything could demonstrate this more it would be the relative equality of the four elements throughout the series -- despite the almost constant abundance of air and earth in most fights. The majority of fights in the series took place with earth surrounding the combatants while not a single one occurred in an airless vacuum, and yet, it is with waterbending alone that fans pretend a surplus of one element can be the deciding factor in a fight.
There's little use in comparing two combatants' abilities if the decision will be made by a shortcut past comparison. Assuming the environment provides a decisive edge sidesteps any meaningful comparison a fan can do, and going by the series itself there's little precedent to take such a route. Once you start to examine such fights on fair ground there opens up a whole ocean of possibility.