The ideal environment for a Tibetan Spaniel used to be high up in the Himalayan mountains where it would perch on Buddhist monastery walls and act as the primary watchdog for approaching strangers. Its bark would warn the real guard dogs to beware the strangers that were coming near. While it still likes cooler temperatures and doesn't do well in very hot, humid weather, it can be very comfortable in an urban environment too.
The household that keeps a Tibetan Spaniel should be one with adults and only older children. Younger children that might tease the dog or play to roughly with it can cause it to exhibit poor socialization around strangers. It will either hide or bite the tiny offender. The dog prefers to be around people who respect it and don't roughhouse it too much.
The dog should have a household companion at all times. Ideally, this is someone living in the home that the dog feels comfortable with, but it can also be another small dog. This dog can't be left alone for long periods of time, as it will suffer separation anxiety. This will come out in obstinate behavior like messing, destructive chewing, and continuous barking while you are away. This can disturb the neighbors who may find the dog's high-pitched bark excessively annoying and call animal control on you.
The dog does appreciate a backyard of its own to play in. This is not only because it needs some exercise daily, but also because it is a small dog. It can be very suspicious of strangers and a bit of a target for larger dogs. Even very aggressive cats can hurt this small dog. It loves to have a bit of exercise, but you can find it gets easily winded after a block or so. A dog that is too tired to walk will simply plop down and keep you from walking too. They are very obstinate and will make it known that they expect you to pick them up and carry them.
This dog does appreciate a routine even though it wants constant companionship. You may find that if you wake up in the morning at 7 AM during the weekdays, it expects you to get up on the weekends at this time as well. If you don't, it will be a dutiful watchdog and wake you up with its barking. Otherwise, it won't bark unless the dog thinks someone is trying to get in the house. It really can be very stubborn and once it thinks that something should be a certain way, it will continue this behavior until you teach it otherwise. The household should be free of too many distractions and noises as these dogs generally prefer a calmer household.