This isn't an encounter I'm preparing. I brought this up as an example to counter some of the other examples, and to show how limiting the conditions where Surprise applies to only those situations where every possible threat has gone unnoticed can lead to equally absurd results.
The DM is the one that prepares the encounters and what everyone (apart from the players) is doing and how they fight. If some creature just happens to surprise someone - that's fine. But if they usually fight by attempting to surprise - they know what it takes to get it done.
So if the dragon wanted to surprise the party, it would have struck before the party encountered the kobold or after the they had dealt with the kobold. If the dragon was just sneaking about for other reasons and just happened to attack them at that moment, thus failing to surprise - how is that an equally absurd result?
I can't even imagine having a rogue PC in an adventure where basically every encounter begins with surprised enemies. It starts off as completely unintentional "abuse" (rogues are a sneaky bunch) - but I'm sure the party will try to ensure the rogue isn't spotted at any cost once they understand what's happening and how insanely good surprise is (or start sneaking with everyone for more chances to get that high roll).
But I'm not contributing anything new to this thread, I'm stuck on repeat.
If you want surprise to be something that, most of the time, requires some effort to achieve. Use the intrepretation that a threat means "one side".
If you want to use the interpretation that a threat means "one individual", I can't stop you.

If you want to make your own definition of a threat that covers something that neither of these do, consider having one group of enemies on the initiative as "a threat". Though I strongly suggest you keep the PCs as one threat to avoid the sneak/invisibility abuse, but that falls into house ruling territory.
The first step of combat is for the DM to detemine surprise (p189).I think the start of the encounter means the first event in the first round.
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