The Dark Dragon is a monster held underneath the ground by the Seven Needles which are controlled by the Magypsies. When all of them are pulled, an Era of Light will begin or an Armageddon will occur and destroy the world. It depends on who pulls the Seven Needles - One with a Pure Heart or one with a Soul of Darkness.
The dragon itself is never seen in the game. Just mentioned several times by the Magypsies and other people. It seems to be as large as the Nowhere Islands