We report a systematic study of light coupling at junctions of overlapping SnO(2) nanofiber waveguides (WGs) as a function of gap separation and guided wavelength. The junctions were assembled on silica substrates using micromanipulation techniques and the gap separation was controlled by depositing thin self-assembled polyelectrolyte coatings at the fiber junctions. We demonstrate that the coupling efficiency is strongly dependent on the gap separation, showing strong fluctuations (0.1 dB/nm) in the power transfer when the separation between nanofibers changes by as little as 2 nm. Experimental results correlate well with numerical simulations using three-dimensional finite-difference time-domain techniques. To demonstrate the feasibility of using coupled nanofiber WGs to modulate light, we encased the junctions in an environment-responsive matrix and exposed the junctions to gaseous vapor. The nanofiber junctions show an ~95% (or ~80%) modulation of the guided 450 nm (or 510 nm) light upon interaction with the gaseous molecules. The results reveal a unique nanofiber-based sensing scheme that does not require a change in the refractive index to detect stimuli, suggesting these structures could play important roles in localized sensing devices including force-based measurements or novel chemically induced light modulators.