Elemental Shards are dropped by almost all NPCs in Avalon, and even some vanilla NPCs.
Air ShardsAir Shards are dropped by creatures that inhabit the air, such as Harpies, Cave Bats, and Giant Bats. They are required in the Elemental Rod, Elemental Excalibur, and the Cloud in a Bottle.
Earth ShardsEarth Shards are dropped by creatures of the earth, such as Man Eaters, Meteor Heads, Cave Bats, and Giant Bats. They are also only required in the Elemental Rod and Elemental Excalibur.
Fire ShardsFire Shards are dropped by Magma Skeletons, Cursed Magma Skeletons, Meteor Heads, and creatures in the Underworld. They are one of the vital ingredients in creating Molten gear, and are also required in the two elemental weapons mentioned above.
Ice ShardsIce Shards are dropped by very few NPCs. They include Ice Skeletons, White Slimes, the Dragon Lord, and Oblivion, as well as creatures of the sea. Ice Shards are required in the crafting of weapons that can freeze your enemies, as well as the elemental weapons.
Jungle ShardsJungle Shards are dropped by all creatures in the Jungle that are specific to that biome. They are not dropped by any other creature. These shards are necessary in crafting Jungle items, and are, obviously, required in the elemental weapons.
Undead ShardsUndead Shards are dropped by all undead monsters. They are required in the crafting of the Skull, the Undead Talisman, and the elemental weapons. Of note, these shards are the most common and are sold for the least money. They also have the lowest rarity of all shards.
Water ShardsWater Shards are dropped by all creatures of the sea. They used to be required in all frozen items, though since the addition of Ice Shards, Water Shards have been reduced to only being required in the elemental weapons.
Of note: All shards are sold for 9 Silver except for the Undead Shard, which is sold for 10 Copper. The Light and Dark Shards are also required for the elemental weapons.