Where are you getting these numbers? This is militia--farmers taking up arms to defend their homes, not a professional standing army. There was a while in medieval England when every able-bodied man was required to have a longbow and be trained in its use. In a country with a strong militia tradition--and in a D&D world, that ought to include pretty much everywhere--I should think you could call up as much as 10-20% of the population to defend a settlement, and do it on very short notice, too.
Obviously, militia wouldn't have nearly the training and discipline of a professional force, and an epic-level threat could often rout them by sheer terror. But don't underestimate the willingness of people to fight for their land.
I think you're drastically overestimating the utility and capability of such forces. The entire history of medieval warfare demonstrates the almost uniform total ineffectiveness of this kind of system. Norse raiding parties roved all over the countryside of northern France for 100 years looting practically at will and rarely, if ever, ran into serious opposition.
The problems are manifold. First of all the population is HIGHLY rural, so basically if you have a Duchy with say 250,000 people in it maybe 3-4 thousand of them might live in anything resembling a town. The rest are scattered hither and yon across the countryside. When the bad guys show up getting them mustered requires a very considerable amount of time. Remember, there is no system of communication besides sending people around the countryside at horse speed at best. Even a well oiled militia will probably take DAYS to muster. By then the action has long since played out.
The other issue here is that you simply cannot afford to be constantly calling up the militia. The same 20% of the population that are your militia are also your main pool of labor. Those people are out doing vital agricultural work.
Check out for instance Harald's response to the invasion of England by William. The Fyrd was called up, but most of them were unable to muster and Harald eventually engaged with a force of less than 10,000 men, probably much less, out of a population of at least a million.
There are other problems as well. Logistics was very poor and underdeveloped. Even if you COULD gather together a substantial number of fighters in one place they would run out of food in short order. Disease and other issues would ravage your army pretty quickly too. On the whole mass mobilizations were infeasible and ineffective in a medieval context. You might manage to get together a bunch of men and drive off moderate threats, but relying on a militia as any kind of feasible defense in the long term or against a major threat didn't even work in historical medieval Europe and would be unlikely to work in most D&D campaign worlds either.
Now look at it from the dragon's perspective. Dragons aren't dumb. What's the tradeoff here? If the dragon wins, it gets a paltry town's worth of loot; maybe a few trinkets from the mayor's house. If it loses--it dies. That's a bad gamble even at highly favorable odds. The richer targets, like a duke's castle, will be correspondingly more "hardened," with stone walls and professional soldiers guarding them.
The end result of this is that a dragon, even an elder or ancient, isn't going to just fly about wreaking havoc. When it gets hungry, it will raid an outlying settlement, snatch up some livestock or peasants from the farms on the periphery, and vanish back into the night. When it wants plunder, it will look for a merchant caravan. Direct dragon attacks on towns and cities will be rare, because they depend heavily on the dragon's ability to catch the town off guard. Once word spreads that a marauding dragon is ravaging the land, people will make plans and be ready for it.
I think actually the case from the dragon's perspective is quite good. He's enormously more mobile than any army. He's able to concentrate all of his force trivially on one spot, and can scout the enemy with impunity. He's going to ALWAYS strike unguarded places, and few places are going to be guarded because if the local humans muster a large force he's simply going to ignore it. In a few days the militia will go home, starve, etc. In the mean time he's out burning their farms, and they can't possibly defend more than a few of them. The defense is effectively a lost cause.
I'd say even a low paragon adult dragon won't find your average human society much of a challenge. Their only actual response that will be effective is to gather up a band of heroes and have them try to off the dragon.
And dragons are a really extraordinary case. They're one of the hardest foes for a "town guardsmen" force to take on--intelligent, highly mobile, with lots of area attacks and a big "shock and awe" factor. A typical high-level monster threat looks more like a gang of ogres or giants; they're big, they're bad, but they won't fare well against a fortified settlement, and a strong kingdom could mount a punitive expedition to hunt them down and wipe them out.
Well, dragons are certainly one of the toughest types of monsters in this scenario, but again look at what the Norsemen did in France. Defense in this case was largely ineffective. Now, they had ships (mobility) and their bases were practically invulnerable. A bunch of bands of giants and humanoids however could probably pull off raids without too much trouble.
