Yu Dao was the oldest of the Fire Nation colonies in the Earth Kingdom; the city was settled before the beginning Hundred Year War by ordinary families as part of the Fire Nation's initial campaign of expansion.
Prior to Fire Nation colonization, Yu Dao was a poor backwater village. When the Fire Nation settlers came to the area, however, that all changed. Together with the Earth Kingdom civilians already living in the area, the Fire Nation created a thriving metalworking industry which evolved into one of the best in the world. The tiny village grew into a thriving, cosmopolitan city. Through the unique blending of Earth Kingdom and Fire Nation culture, Yu Dao became one of the wealthiest cities in the world. According to Fire LordZuko, the colony of Yu Dao made the finest metal of any nation.
In 100 ASC, at the end of the Hundred Year War, Earth KingKuei and Fire Lord Zuko agreed to start the Harmony Restoration Movement, aimed at the removal of all Fire Nation colonies from Earth Kingdom territory. However, Yu Dao posed a particular problem due to its age, as many families had lived in the city for over one hundred years and had put down deep roots in the area. This led to conflict among AvatarAang, Fire Lord Zuko, and Earth King Kuei. After breaking his connection with Avatar Roku due to disagreements regarding how to handle the situation, Aang entered the Avatar State to separate the colony from the surrounding lands. The conflict was eventually resolved with the creation of the United Republic of Nations, which Yu Dao became a part of.
Yu Dao is located in a wide, flat valley which is bounded by rocky terrain on all sides. The city is enclosed by a sandstone wall with one opening which serves as the gateway to the city. Yu Dao's streets are lined by predominantly low rise buildings which are built in a unique style that combines Earth Kingdom and Fire Nation architecture. The city is very compacted as the surrounding terrain limits Yu Dao's building space.
A wide, central pathway runs from Yu Dao's gate to the back of the city. The avenue serves as the main thoroughfare of the metropolis, and many smaller streets branch off of it. There is also a canal that runs through the city.
Businesses include: the Green Flame Inn, the Green Blaze Inn, Old Chen's Blacksmith Shop, Yu Dao Grocery store, Tasty Hotpot Restaurant, and the Sweet Aroma Teahouse. Other buildings include the Morishita home.
Unlike most Fire Nation colonies, Yu Dao advocated a form of public equality, allowing Earth Kingdom citizens to live among Fire Nation citizens freely without any form of oppression; this appeared to be effective at a very high level, as earthbenders were able to freely practice their bending alongside firebenders without any fear of persecution.
Yu Dao's unique blend of Fire Nation and Earth Kingdom architecture gave it a distinct feel, as the architecture of the city represented a merging of both nations' styles of building. The Earth Kingdom citizens generally occupied a second-class position in the city's society; however, this was not universally the case, as the Fire Nation mayor's wife, Mrs. Morishita, was an earthbender, as was her daughter. Fire Lord Zuko observed that even so, the people were better off than they had been before the colony's foundation.
Yu Dao was heavily based on Qingdao, a city in China that was a German colony from 1898 to 1918.
The town's name, meaning "Jade Island", is likely derived from the greenery in the area. It also serves as a reminder of the town's Earth Kingdom origins, due to jade's green color. Despite its name, the city is not an island; it is located at the bottom of a valley surrounded by karst structures.