As a general rule, yes. As something to balance the odds for specific encounters, no. And that's my point: an encounter shouldn't require special terrain for it to be balanced.
Nor is it necessary. Cover is one of those things usable by both sides, and it introduces meaningful choices to both the players and the dragon. However, cover isn't necessary.
But the PCs who charge the dragon will come within range of its breath weapon.
And PCs who try to fight the dragon in the cloud are also within range of its breath weapon. Except the dragon has combat advantage and is nigh impossible to hit.
But the dragon can't move out on its turn and breath midmovement unless he is bloodied. And the dragon's moving out to breath on the players anyways. So the options are 'Charge the dragon and get breathed on' or 'Don't charge the dragon and get breathed on' or 'Attack the dragon where it is nigh invulnerable and get breathed on.'
You can't avoid being breathed on. Just pointing that out.
The assumption is that the ranger and the wizard (or other PCs with ranged and area attacks) will be attacking while the dragon is rolling to recharge its breath. The melee-focused PCs will have to resort to inferior ranged attacks or just wait.
The thing is, this is making attacks against a foe that is not making attacks back. It doesn't matter if you can only hit on a natural 20, if you are taking in 0 damage per round, you will outlast that opponent. It's not fun, it's not exciting, it's not cinematic, but it's certain victory.
And the dragon knows it.
Right, but while he's waiting, he's frustrating the melee-focused PCs, and when he comes out, he has a potent weapon recharged.
And they aren't being frustrated by the Cloud of Darkness?
Melee characters forcing a dragon to fight on their terms is a lot less frustrating than hacking at it inside a cloud of darkness. When players make plans, and execute tactics, that can be -very- fun.
Without Skill Focus and a 20 Wisdom, +11 or +13 is about as good a Perception modifier as a 4th-level character is likely to get. Characters with lower Wisdom and which are not trained in Perception have only a miniscule chance of beating the dragon's check.
Agreed. But only one needs to beat the Stealth check to point out it's squares. Meanwhile the dragon's doing -nothing- to them, because the party is out of range of the dragon. So, the party has the advantage still.
It isn't that black and white. In order for a kobold slyblade to get 4d6 damage plus 5 ongoing damage, he has to hit with two attack rolls with combat advantage. If he hits with one, he only deals 2d6 damage with combat advantage. A black dragon's breath weapon needs to hit only once to deal 1d12+3 plus 5 ongoing acid damage, and if he's been charged by three melee characters, he can probably attack all three at the same time. In addition, the area attacks which are most effective against the dragon may sometimes deal double or triple damage to the slyblades, depending on how many the PC can catch in the blast. The slyblades also have AC and defences about 4 points lower than the black dragon (before taking cloud of darkness into account), and five slyblades collectively have about 210 hit points, about 14 less than the dragon. There may be a bit of "wastage" because the PCs may deal more damage than is necessary to kill a slyblade, but the slyblades' collective damage output also goes down by about a fifth each time one is killed. On balance, I'd say that the young black dragon is a lot tougher.
The black dragon is tougher to hit... but on the other hand, five slyblades can get the drop on a character, and assuming a 50% hit rate, and even if no slyblade gets both attacks in, that's still 10d6 to a single character in a single round, which in turn, translates to an average of 33 damage, which is a certain threat to that character. If it works out instead that a kobold gets two hits in, and another gets none, that's even more damage on top of that. The dragon simply can't do that level of -concentrated- damage. So, while players can drop a kobold and take it out as a threat and reduce its damage, so too can the kobolds do that to the players.
It's not as simple as 'Dragon better' and I agree. But the dragon can't put out the same amount of damage as a team of slyblades, not every single round. The slyblades don't need concealment or cover to do their bad deeds.... tho it helps a lot.
The players have the advantage of range on the dragon. The victory is inevitable for the players if the dragon hides in the darkness. A single level 1 warlock with eldritch blast will slay this dragon if he hides in the darkness, tho it will take a long time.
So therefore it is by far NOT optimal for the dragon to hide in the darkness from the players. And the dragon is smart enough to realize that.
If this is the case, then the optimal tactic for the dragon is NOT to turtle in the darkness, but instead to use it to cut off places he doesn't want the players to be. Oh, the players have set down a healing banner? -THERE- is where you place the cloud of darkness. Oh, the players are using your own deathtrap against you? -There- is where you place the cloud of darkness. Then the players have to move into less advantageous locations. The dragon then leaves to harass the players.
So, let's recap.
It is frustrating for the players if the dragon stays in the darkness.
It is defeat for the dragon if the dragon stays in the darkness.
Therefore:
There is no value to the game to having the dragon stay in the darkness.
So why is this a problem in your games?
The answer to the Dragon fight is -really simple.- Use tactics. This works on both sides.