Avoid Notice has the "exploration" trait. It's a check you make while moving at half speed during Exploration mode.
If you are Avoiding Notice when the game switches from Exploration mode to Encounter mode, you get
a) A different way to determine your initiative (Stealth check rather than Perception check)
and
b) A chance to not be noticed by the opponent (Compare their Perception DC to your Stealth check)
If you're Avoiding Notice at the start of an encounter, you usually roll a Stealth check instead of a Perception check both to determine your initiative and to see if the enemies notice you (based on their Perception DCs, as normal for Sneak, regardless of their initiative check results)
Once you're in Encounter mode, the sidebar on page 251 explains how Observed, Hidden and Undetected work when using Stealth during an encounter.
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To elaborate, once you enter encounter mode you would determine how hidden creatures are based on stealth rolls, and whether or not they are in cover/concealed. You could avoid notice in a baren landscape, but once you're close enough to be seen, you roll stealth but become observed. You also would likely start the encounter pretty far away.
Meanwhile in a dense forest with tons of cover the encounter would likely start when the rogue moves to make their attack against the target who was completely unaware of their presence.
So for your example: yes, but without cover/concealment they become observed right away.
Also, you get a bonus for cover because it's a physical object in the way. You can also Hide in concealment, which grants no bonus.
Short answer: no.
One thing to logically assume is that a character Avoiding Notice travels slower not because they are actually moving their bodies slower, but because they are starting to and from cover to minimize visibility and peeking around every corner before turning it
So, it follows that if your player is Avoiding Notice at the start of the encounter, they are behind the nearest cover when initiative begins. I just place their token in whatever space would provide that. If they are in a long enough featureless hallway then they can't really be avoiding notice in the first place unless they have invisibility or a feat that lets them use stealth without cover or concealment. Part of this is just not being a slave to where the player bothered to move their mini to when initiative gets rolled. Figure out where people logically would have been given their marching and exploration tactic.
If they are in a long enough featureless hallway then they can't really be avoiding notice in the first place unless they have invisibility or a feat that lets them use stealth without cover or concealment.
Avoiding Notice is not only about being seen. So they can really be avoiding notice even in a long featureless hallway if they are trying to move quietly, stay behind the light source so they don't cast a shadow ahead, and taking other precautions.
To further elaborate... in the aforementioned featureless waste.. a ROGUE using Avoid Notice would still roll Stealth for initiative and therefore so long as they beat their opponent's initiative would get the SUPRISE ATTACK class feature bonus?
Yes, because the first requirement is that you use Deception or Stealth for initiative.
If you are Avoiding Notice at the start of an encounter, you roll Stealth for initiative.
If you have used Stealth for initiative, and the encounter is in the first round, then any creature that has not yet acted is flat-footed to you.