I don't know exactly what all happened with the Avatar sequels. With the enormous success of the first, it's kind of a no-brainer that sequels would happen, but then it just ended up taking forever for these movies to get into production. Maybe James Cameron didn't quite know where he wanted the story to go and needed time to hash out the scripts, maybe he was busy with other projects for a while (like producing the Alita movie, another long-time passion project of his), maybe it's just the huge logistical issues with filming up to four movies practically simultaneously. Maybe it's all of the above.
The sequels were first announced immediately after the first film came out, initially aiming for a 2014 release for Avatar 2, but then various delays set in, with some wondering if it was ever going to see the light of day. Neil Cicierega sums it up pretty well:
Remember that these were also in the works prior to Disney's acquisition of Fox, so this isn't wholly the Rat's doing. That said, they'd be crazy to dump all the work that had previously gone into these movies, even crazier to give up on sequels to one of the biggest movies of all time. I think there were plans at one point to alternate between Avatar sequels and Star Wars movies every year, but with how badly the Disney Trilogy poisoned that well, it sure doesn't seem likely. Although 4 and 5 have supposedly already had some filming done, Cameron himself has said that if 2 and 3 don't do well, then those movies won't happen either.
It's all up in the air at this point, so there's not much point in speculating until 2 comes out. If it does gangbusters, expect Avatar to be whored out to hell and back. If it does adequate...who knows? It does have the benefit of not having nearly as much legacy as Star Wars (the summation of the Avatar franchise at this point is pretty much one movie and one theme park), so there's room for it to grow without pissing off long-time fans.
My biggest question with the Avatar sequels is this: is the spectacle really going to be enough? Avatar had a flimsy plot and 2D characters, but it was sold on the
experience of "going to Pandora" with 3D. And admittedly, as someone who saw it on an IMAX screen when it first came out, it was pretty darn immersive. But we've had over a decade of CGI nightmares since then, with the entire MCU being a bluescreen assembly line production. And with Top Gun: Maverick's insistence on real stunts with real planes and real effects for the majority of the movie showing how good a movie can look when it's actually being filmed in reality, I wonder if another Avatar movie will have the same impact. Either they'll step up the actual storytelling aspect of the movie, or they're just gonna coast on general audiences being too dumb to care as long as there are flashy lights and explosions.
Like I said, it's all pointless speculation for now. We'll see what happens in winter, assuming it doesn't get pushed back
again.