The action happens in winter when Charlotte and the author "went exploring the blank virgin spaces of the white world that lay beyond". The action is situated in winter when they followed the traces of an annonymous beast that they couldn't identify.It seemed something "lizardy" or "iguanadon" but it was needed a British name, so they called it "a dragon". But because the traces were little, they supposed it was a "half grown specimen", because "all the dragons must be small to begin with". They ended in a circus-man garden, and are invited to have some tea. Then, Charlotte asked the circus-man to tell a story.
He tells the story of a sheperd, his wife and their boy who was studying "book learning, natural history and fairy tales". One day the sheperd comes home extremely scared and describes a beast. The boy tells him not to worry because "it's only a dragon", and asks him not to go there without him because he doesn't know anything about dragons and they are quite sensitive. The boy gets there and hears the story of the dragon,who happens to write poems, and has been put away because he wasn't interested in chasing knights. The boy's mother cooked for the dragon when he was busy writing. But the boy knew that a "four cart-horses and covered with blue scales dragon, cannot be kept altogether out of the public view" and although "people were proud to have a dragon of their own", they knew it had to be exterminated. So they sent for St. George to kill the Dragon, but because the dragon doesn't want to fight, the boy plays the mediator between it and St. George, to get to an agreement. They get to meet and discuss the final details of the "manufactured" battle, but the boy is nervous as"a manager in his first night", because "the fight will take place without any rehearsal". The battle went as planned, and in the end St. George warned people there not to invent any more stories, to be friendly with the dragon, "and maybe he'll settle in" there.After the banquet the boy and St. George brought the Dragon back home.
Charlotte wanted to know more about the dragon.On their way back home, they heard a song about a dragon...
This story proves that dragons can be nice,too, they can write poems and love to play.They can feel lonely if nobody wants to play with them.