La cerilla cayó en la ceniza junto al encendedor.

Yes. In Spain, cerilla is a normal everyday word for match.

A useful regional note:

• In Spain: cerilla is very common.
• In much of Latin America: fósforo is often more common for match.

So this sentence sounds especially natural in Peninsular Spanish.

La cerilla means the speaker is referring to a specific match, one that is already identifiable from the context.

Compare:

• La cerilla cayó... = the match fell...
• Una cerilla cayó... = a match fell...

So the definite article la works just like the here.

Cayó is the preterite, third-person singular, from caer.

It is used for a completed event:

• La cerilla cayó = the fall happened as a single event.

Caía is the imperfect, which would suggest:

• an ongoing action,
• background description,
• or repeated/habitual falling.

So:

• cayó = it fell
• caía = it was falling / used to fall

In this sentence, the speaker is describing one finished action, so cayó is the natural choice.

This comes from the verb caer.

In some forms of caer, Spanish uses y:

• cayó
• cayeron
• cayendo

This is just part of how the verb is formed.

The accent mark in cayó shows that the stress falls on the last syllable:

• ca-YÓ

Without the accent, cayo would be pronounced differently and could be read as a different word.

Spanish often uses ceniza in the singular to mean ash as a substance.

So:

• la ceniza = ash
• las cenizas = ashes

Both exist, but they are not always used in exactly the same way as English.

Very often:

• ceniza refers to ash in a material or mass sense.
• cenizas can refer to ashes as remains, including cremated remains in some contexts.

So en la ceniza is completely natural.

After caer, Spanish commonly uses en to express where something ends up:

• caer en el agua
• caer en la arena
• caer en la ceniza

Here en means something like into or in/onto, depending on the context.

Sobre la ceniza would emphasize on top of the ash more explicitly.

So:

• en la ceniza = a natural, general way to say it fell into/in the ash
• sobre la ceniza = more specifically on top of the ash

Junto a means next to, beside, or by.

So:

• junto al encendedor = next to the lighter

The form al is a contraction:

• a + el = al

So:

• junto a el encendedor is incorrect
• junto al encendedor is correct

This contraction happens whenever a is followed by the masculine singular article el.

Compare:

• junto al encendedor
• junto a la caja

There is no contraction with la.

Yes, encendedor is a perfectly normal word for lighter.

In Spain, you will also often hear mechero.

Very roughly:

• encendedor = lighter
• mechero = lighter, very common in everyday speech in Spain

Both are natural, though mechero is especially common in conversation.

Yes, se cayó is also possible in many contexts, but cayó is fine here.

The difference is roughly:

• cayó = neutral statement of the fall
• se cayó = often sounds a bit more colloquial and can emphasize the fall as an event that happened accidentally

With an object like la cerilla, the simple cayó sounds natural and straightforward.

So this sentence is not missing anything.

Yes. Spanish word order is flexible, although the original order is completely normal:

• La cerilla cayó en la ceniza junto al encendedor.

You could move elements for emphasis, for example:

• En la ceniza, junto al encendedor, cayó la cerilla.

That sounds more literary or marked.

So the original sentence uses the most neutral, natural order:

• subject + verb + location phrases

There is a slight possible ambiguity, yes.

A listener will probably understand the general scene without a problem, but grammatically junto al encendedor could be taken as:

• describing where the ash is, or
• describing where the match fell

If you want to make it clearer, you could say:

• La cerilla cayó en la ceniza que estaba junto al encendedor.
  This clearly means the ash was next to the lighter.

Or:

• La cerilla cayó junto al encendedor, en la ceniza.
  This makes next to the lighter attach more clearly to the fall location.

So the original is natural, but not maximally precise.