In the final battle, between Avatar Aang and Firelord Ozai, they had battled to a stalemate. The Firelord backing the Avatar into a corner, was able to wound him grievously. In the final moments of their battle, Aang called on the Avatar state to aid him in battle, to remove Ozai's bending. Ozai however, was able to fight back, and the internal battle wounded Raava, the Avatar Spirit. This destroyed all of the past Avatar and locked her in the Spirit World. This led to Aang's death, though Ozai died also. Due to her wounds, Raava had to remain in the Spirit World for many years, regaining her strength so that she may one day return the Avatar to the world, to bring back balance.
Aang's death led to many things changing from how we all know them. Zuko became Firelord, but without Aang, Republic City was never founded. However, the Air Nomads made a resurgence with the return of Raava to the spirit world causing a Harmonic Convergence, sending airbending energy back into the world. It is now 200 years after the Death of Aang, time has moved forwards and technology has advanced. Now the main cities are home to large skyscrapers made from metal and stone, as well as larger versions of the more traditional buildings. The major cities and rich districts are home to cars and other vehicles, though they are more closely related to the Modern era. There are no guns, though some non-benders are able to use different machinery to mimic bending. Currently, the world is not in peace but in an era of conflicting governments. The new Earth King seeks to expand his influence while the Air nomads are trying to regain centuries of lost culture and heritage. The Fire Nation is trying to make up for their deeds of the past, namely the hundred years war. While all of this is going on, the Water Tribes have entered almost total isolation from the rest of the world.
The Avatar returned after a long absence and lived out his life. Following that, there have been ten avatars that lived their lives and attempted to bring a balance to this world, but they were each systematically assassinated after gaining public notice. No one knows who has been hunting them down, and the most recent avatar is still undiscovered.