It compares and contrasts the clothing styles, martial arts techniques and the tools/weapons used by the various characters to show what their inspirations and parallels are. It shows that the Air Nomads were based on Tibetan Monks, the Water Tribes on the Inuits, the Fire Kingdom on the Japanese and the Earth Kingdom on the Chinese (actually they don't do the latter as they're not in Season/Movie 1, but that's pretty clear from the series).

The next bit is where they shoot down all the common counter-arguments, including the one about the fact that they don't 'look' like the supposed ethnic groups they're based on, missing the point that the artistic style of anime is responsible for this. There's a great bit where they go through several well-known Japanese anime characters who have Japanese names and live in Japan but because they have white skin are clearly not actually Japanese. Logicfail, indeed. Especially like the "Remember: this all rests on the basis that there are no good Asian actors. THIS IS KEY," bit.