Hi AmigaDragon!
We've seen three major species of dragons in MK: true dragons, eastern dragons, and dragonettes.
True dragons are the classic Western dragon archetype. They come in a variety of different colors, but those colors don't have anything to do with what powers they have; they seem to be similar to the variations in skin tone among humans. They fly with wings, though their bodies have a natural magic field that gives them more lift than they otherwise should have for their wing size. They are as intelligent as a smart human or smarter, and they can live a very long time, so they can accumulate a LOT of experience. Like reptiles, they never stop growing, and they get stronger as they get older. They develop a breath weapon sometime during adulthood, and older dragons can shape-shift at will without paying attention to petty things like excess body mass. All true dragons have an innate aptitude for sorcery, but they don't all develop it to the same extent, and they get better at using it as they get older. True dragons are native to the Dragon Mountains and the Vysharad (sp?) mountains east of the Flatlands.
Eastern dragons don't have wings; they fly through sheer magical force, swimming through the air like an eel. This may or may not mean that they have a stronger talent for magic than Western dragons. I have no idea if they have a breath weapon. So far they've only been seen in Khumar, but they probably also live in Yamato, the Oriental Coastlands and other eastern parts of Galendor.
Dragonettes are native to the Dragonette Islands, an archipelago west of Metamor. They are about the size of a housecat, but they can breathe jets of fire of impressive size. Dragonettes cannot speak, but they can understand speech; they communicate with non-dragonettes through telepathic word-pictures.
I've not heard of dragons of any type inhabiting places other than Galendor, but that may just be because we haven't seen much of the other continents.
Hope this helps!
Cheers,
Raven