Yeah, what's up with that? We need a few more, err, environmentalists? in this community! You'd think more people would make them, as they're objectively easier to make than challenge levels.
Hmm... In general, I would agree with you especially when it comes to short levels, but I think things have changed somewhat since people first started making KS levels back in the day. While making an Environmental (a pure one) saves you the trouble of having to deal with designing and balancing challenges, I personally also feel somehow "pressured" to bring something else to the plate in exchange (e.g. an exceptionally detailed/unique look, very distinct screens, hidden bonuses to motivate exploring...) in order to really catch and maintain the people's attention... and that may be especially harder to accomplish nowadays, when so many different visual styles, themes and ideas have already been tried out by designers and experienced by players.
Well, granted, maybe I would feel differently if I had kept playing for the past ten years and thus seen a lot more (I probably haven't played more than 200-250 levels in total, in my knytting life, and of course most of them I played ten or more years ago). But right now, when I look at just the existing "public" tilesets (including defaults), I still see so many possibilities for interesting visuals that I don't think have been explored - or if they have, haven't been explored to their full potential yet. And once you start combining tilesets - well, the possibilities are (almost) literally endless!
But you're right, of course, that an environmental needs to have a special visual appeal; that's what the genre is about. I guess that just seems comparatively easy to achieve to me because that's just what my brain is good at. Designing challenges feels so much harder. Almost impossibly hard, like I can't even think properly about that kind of thing. Even just thinking of a comparatively simple structure for FW (which is not a challenge level, but does have the four keys in it, so there's some sequence to things, hopefully) felt like it almost broke my brain.
BUT! Speaking to the hypothetical level makers who might want to make small, simple environmentals but feel like it is not worth it: I would totally play them! I still return to some of the classics sometimes, and a lot of them are small and not that complicated in terms of structure. Not everything needs to be Falling Water! Sometimes all you need is A Walk at Night!
Because that's also what environmentals are about: just taking a nice, short break, just taking a walk. A sort of short, minimally interactive, visual meditation.
(I feel like KS quite possibly invented the walking sim...)
In fact, and when it comes to large levels, I believe more planning and work may actually be required to design an environmental level capable of keeping players interested enough to play all the way to the end than you would need for a regular one where you have the challenges/puzzles acting as short-term goals... so I can't help but commend your efforts here!
Honestly? Even though I'm trying to give some sort of structure to FW, I myself as a player am perfectly happy to just let myself drift through an entirely open world as long as there is a high rate of attractive/interesting screens to explore. (And probably the structure of FW won't be anything to write home about, so: everybody, adjust your expectations accordingly...) I'd really like to encourage people to just allow themselves to build levels based on the simple fun of... playing with tilesets, essentially. Even if it results in messy, freeform level design reminiscent of outsider art.
Then again, I guess the same thing could be argued about people having already seen a lot in terms of interesting/unique challenges at this point... plus, a big reason we keep coming back to creating KS stuff is the fun we have ourselves while designing/building it... so I don't think any of the above should ever demotivate people to keep sharing new stuff 
Indeed! On both points.
I was, originally, planning to release this in three parts, with the Dry Lands (plus some bits of the main level that won't be accessible before visiting the Dry Lands) constituting the third part, and then I decided to make it all one big level instead, and now, since the bottom part is so very nearly finished and the Dry Lands are so very much not, I'm kinda wondering about the split release approach again. Hm.
Just my two cents here, but if that's the case (the Dry Lands unlocking more stuff in the level, instead of being just a standalone area), then I'd stick to the single release plan for a more cohesive experience... unless you foresee this last area taking a particularly long time to build, in which case something like a "before and after" (visiting the Dry Lands, I mean) two-episode release may make sense here. But this is me speaking blindly without any knowledge of those unlocked areas' sizes 
Hmm, yeah. I don't know, I need to think about this some more. The "bottom" part isn't even all that finished yet, anyway, of course, so I still have some time to do the thinking...