Hi Doug,
Error messages tend to be short and succinct. The first time you see this one in this circumstance it's a bit puzzling at first, but it does tell you there's division by zero going on somewhere in your formula. In AVERAGE, which calculates the arithmetic mean, the only value that is going to cause a division by zero error is the count of the numeric values contributing to the average. If that count is zero, you're looking for a reason that none of the cells included in the average is found to have contained a number.
Puzzling the first time, but less so if it happens again.
Functions in Numbers, with few exceptions, interpret text values, including text values composed of number characters, as having a numeric value of zero. The first notice of that often comes from the 'wrong' results of a formula using the SUM format.
Spotting text masquerading as number values is pretty simple if you haven't manually set the text alignment of text in the cells. Numbers aligns text values to the left edge of the cell, and aligns numeric values (and quasi-numeric values such as Date and Time) to the right edge of the cell. Note the examples to the left of the error triangle in your example.
Regards,
Barry