What happed to azula?

In the third season, Azula slowly begins to become crazy as her "friends", Ty lee and Mai betrayed her. This proved to her that fear was not reliable. After she became Firelord, she fired her subjects, her servants, the royal firebenders and the Dy Lee as she feared she could not trust them.

Zuko and Katara arrived in the Fire Nation to defeat her so Zuko could take the throne. She lost (Katata tied her up) with much tears and production of fire from her mouth.