Michael Dante DiMartino and Bryan Konietzko, the creators of the original animated show, were tapped by Netflix two years ago to lead a live-action remake of the series. Their plan was to correct the mistakes that led to M. Night Shyamalan's badly-received 2009 live-action film and to deliver a story that was true to the spirit of the original series whilst also allowing for some changes due to the shift in medium.
In particular, DiMartino and Konietzko were keen to ensure continuity in terms of ethnic casting (the 2009 movie infamously "whitewashed" several key roles, replacing characters meant to be inspired by Inuit or Asian backgrounds with white actors) with the original animated show. It appears that Netflix has disagreed with some of their choices. It's unclear if casting itself was in dispute, but it is notable that for a show that was due to start shooting in the spring (before a pandemic delayed things) and which had already had sets and costumes created and some test-filming done, no final casting had been announced as of the start of this year.
DiMartino, in his statement, notes that Netflix promised to honour his and Konietzko's vision, but more recently had apparently rolled back on this statement. He notes that he and Konietzko were no longer in "creative control" of the project, suggesting that higher-ups at Netflix had enforced decisions on them that they were not willing to accept. DiMartino notes that the project is continuing and may end up being enjoyable, but it is not the project he or Konietzko "envisioned or intended to make." He notes that he and Konietzko had also resigned in June.
Intriguingly, DiMartino noted that they were "not done" with the Avatar universe and the recent surge in popularity of both Avatar: The Last Airebender and its sequel series, The Legend of Korra, had re-inspired them, hinting at the possibility of a third animated series in this universe.
Netflix have, so far, not offered any response.