What's that in the distance? It's a bird! It's a plane! Heh, Nope! It's a giant fire breathing dragon about to swoop down and bite your little head off!
These giant beasts can be found in all biomes, though this beautiful lizard is VERY rare. About a 1/65 chance of spawning. Be cautious when engaging in battle! They can swoop down and deal a heavy 40 damage. Killing them isn't to easy, as they have a whopping 200Hp.
Their A.I. would allow them to fly up about 30 blocks high. And fly low to hit their targets. They attack Villagers, Knights, and Players.
Managing to kill one will drop 3-6 DragonScales. DragonScales can be used to make armor, tools, and jewelry. All tools are better than all other tools, besides GreenStone Gold. The armor would also be second best, behind Diamantium. The jewelry can be enchanted into new ones, listed in my other post, New Jewelry.
Link:
http://totalminerforums.net/index.php?topic=6249.0