Their role in my world is, largely, a simple DM's presence/tool and an example/symbol of "supreme [elemental, magical, bestial, whatever I need] power." When I need them/one to be good, they're good. Powerful? They're powerful. Big Bad? The biggest and baddest.
Per the campaign setting's history, dragons were created in the dawn of the world by the multiverse's progenitor as a "gift" for his lover/partner/beloved/cohort, preceding even the most elder deities. The progenitor "god", with the creation of the "other than [he], who was everything", became the earth/physical existence. Drawing from the ores and stones, most precious metals, and most beautiful gems, infused with his own primordial power and bestowed with gifts of their particular nature, he creates the first dragons -the supreme, most powerful, originators of the multitudinous species of "True Wyrms"- and they were called the Children of Zho. (Zho -the sky/the astral- then creates the titans as a gift for his "other" and, so, dragons and titans exist in the world before any/all divinities and, thus, also far predate "the mortal races."
Now/today, in the campaign setting's present, their existence is highly questioned in many parts of the world. "True" dragons are incredibly rare and not often seen. There are rumors of a cabal of elder dragons who control and command the [vastly superior to elvin- or human-worked sorcery] "dragon magic" from a hidden tower high in some remote mountains, an ancient site known simply as "the Tower of Wyr" in legends and fables. This force is alleged to be the source of the magical mastery of the single individual in each generation of a line of reclusive wizards who is known as "the Dragonmage."
Other than this enigmatic "helpful" force of magical good, dragons are rarely encountered or rarely knowingly encountered as several roam the realms in mortal/humanoid guises. Only elder wyrms can engage in such feats, and the evil of their kind rarely deign to sully themselves in such an inferior form. So there are the occasional rumors of a dragon lair in some remote mountain or deep within an impassable swamp or dark wood.
Draconic creatures on the other hand, not "true dragons", are far less rare and equally feared and awed for their dragon-like appearances and/or abilities (things like behirs, dragonnes, dracolisks, wingless drakes, linorms, etc...). They range from the legendary and unbelievably rare to the downright commonplace. Lapdrakes (pseudo-dragons), for example, are fairly common "animal/pet-like" dragons found in the eastern mage-lands (where magical study, practice, and creatures are far more accepted).
So, to recap, in short, dragons are whatever role I need of them to maintain a sense of magic, mystery, or mastery as makes sense within the setting's internal consistency.
