Aang defeats the Fire nation fleet at the battle of the Northern Water Temple, Commander Zhao is drowned during the battle and Princess Yue sacrifices herself after the moon spirit is killed.
In keeping with the cartoon Aang is the last airbender having survived teh extermination of all the other Airbenders by running away getting caught in a storm and freezing himself and his Bison Appa in a block of ice. Sokka and katara find him and free him. The rest of the movie he spends escaping prince Zuko and Commander Zhao while traveling north to the northen Water tribe since that's where he can find a Water bending master as he needs to learn to master all the elements in order, Water, Earth and Fire. They make it to the Water temple where Aang and Katara train. When the fire nation shows up Commander Zhao succeeds in killing the moon spirit which had decided to take mortal form as a koi fish. The water tribe gets its powers from the moon so destroying the moon will render all waterbenders helpless. Iroh knowing that there are just some things you don't mess with fights back against the Firebender soldiers and runs off Zhao after he stabs the fish. The water tribe princess Yue realizes she must take the koi fishes place to return the balance so she dies and the fish lives again.
Aang goes into avatar mode and defeats the fire nation armada with a tidal wave. Commander Zhao is drowned by 4 waterbenders. In the end the entire northern water kingdom bows to Aang and Aang finally bows back accepting his destiny as the Avatar. Firelord Ozai gives a mission to his daughter Azula to stop the avatar before Sozin's comet so he can win the war when the comet returns in 3 years.
Fans of the TV series will be highly disappointed by glaring omissions, (no King Bumi, Kyoshi warriors, Avatar Roku, Jet, the people at the Northern Air temple) storyline changes that make zero sense (over complicating Yue's death, changing who kills Zhao, too much Fire lord Ozai) and boring fight scenes.