In the subspecies folder, the spawns (as well as other information) for most of the races and their sub-races are kept as xml files, which is a language like HTML that the game's code reads to control some parts of the game. Each sub-race of a given race is kept as a separate file in Lilith's Throne/res/race/(mod-maker's name)/(race name)/subspecies. For dragons, it is located in /res/race/dsg/dragon/subspecies , the relevant file in here being dragon.xml
Specifically, there are the <regionLocations> and the <worldLocations> tags within these files, which govern the parts of the world the race can spawn in. The former is for general map areas, and the latter is for specific locations. Each region/location also has a separate spawn rarity defined, which sets the base encounter chance before any multipliers by furry preferences are brought into consideration.
By default, dragons do not spawn in Dominion, since they can only spawn in volcano, desert, and mountain tiles, all of which being part of the world map, which does not have any encounters programmed, thus meaning that they do not natively occur in-game (AFAIK; they might be able to spawn as slaves, but I haven't seen it before). In each of those regions, it is an extremely rare spawn.
To have it spawn in Dominion, there are two options: first, you can simply add Dominion as a region that dragons can spawn in under the regionLocations tag. It would look something like this, assuming you wanted to keep their mystique:
XML:
<regionLocations>
<region rarity="ZERO_EXTREMELY_RARE">VOLCANO</region>
<region rarity="ZERO_EXTREMELY_RARE">DESERT</region>
<region rarity="ZERO_EXTREMELY_RARE">MOUNTAINS</region>
<region rarity="ZERO_EXTREMELY_RARE">DOMINION</region>
</regionLocations>
Alternatively, if you wanted them to spawn in a more specific location, say if you wanted them to spawn in the Nightlife Club, you would have to change
<worldLocations/>
(which closes itself in the same line since there's nothing to put in) into something like this:
XML:
<worldLocations>
<world rarity="ZERO_EXTREMELY_RARE">NIGHTLIFE_CLUB</region>
</worldLocations>
There are several options documented in
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from the source code in case you wanted them to be either more common or even more rare, in which you would change the rarity="" to be your desired rarity. As an example, let's say that dragons, despite living so far away from Dominion, really enjoy clubbing, and fill up the Nightlife club most nights, despite otherwise not being in the city:
XML:
<worldLocations>
<world rarity="FOUR_COMMON">NIGHTLIFE_CLUB</region>
</worldLocations>
This will cause them to be frequently-seen in the Nightlife Club, though they still won't spawn in Dominion at-large unless you happened to also edit the regionLocations, since worldLocations controls specific parts of the map rather than overarching areas.
I hope this helps.