Besides dragon (derived from French), Tolkien variously used the terms drake (the original English term, from Old English draca, in turn from Latin draco) and worm (from Old English wyrm, "serpent", "dragon").
The dragons were created by Morgoth during the First Age, when Glaurung first appeared. It is stated in The Children of Húrin that they are great spirits. This means that they must be fallen Maiar (although some of Tolkien's earlier works, such as The Silmarillion, suggest that they were bred from a corrupted stock; see Glaurung). Dragons were capable of breeding on their own, and in later ages the Withered Heath was purportedly their spawning ground.
Tolkien designed his own taxonomic system for dragons, based on locomotion and fire-breathing.
Some dragons (Glaurung) walked on four legs, like Komodo dragons or other lizards. Other dragons (Ancalagon, Smaug) could both walk on four legs and fly using wings. Winged-dragons were only first witnessed during the War of Wrath, the battle that ended the First Age, so all dragons seen before the end of the First Age could not fly (such as Glaurung), although breeds of wingless dragons did exist.
Dragons who could breathe fire were called Urulóki (singular Urulokë), "Fire-drakes". It is not entirely clear whether the term "Urulóki" referred only to the first dragons such as Glaurung that could breathe fire but were wingless, or to any dragon that could breathe fire, and thus include Smaug. In Appendix A of The Lord of the Rings Tolkien mentions a "Cold-drake". It is commonly assumed, though not directly stated, that this term indicated a dragon which could not breathe fire, rather than one who "breathed" ice or snow like the White Dragons of Dungeons & Dragons. Further, Tolkien calls a fire-breathing dragon in the non-Middle-earth story Farmer Giles of Ham a "hot" one.
Tolkien calls the dragon Scatha a "long-worm" but does not explicitly explain the term.
Glaurung has few types of worshipers mainly evil dragons, (though the good dragons still pay offerings to him), evil characters, and evil creatures, and etc. Glaurung is an easily angered god, if an opposing force tries to distrupt his worshipers or their way of life he sends waves of black and red dragons to slay the opposing forces.
Glaurung himself has only one true foe and he is none other than Moradin the Dwarf God of smithing. Most D&D dungeon masters will not use Glaurung mainly because Glaurung is an evil God, and will use IO instead, to counter balance him. Io fears Glaurung mainly due to his massive size and power, which is why most updated D&D campaigns will not include Glaurung. Further information is found in "Middle-Earth Roleplaying" DM book published by I.C.E. in 1974.
The Dark Lord Morgoth bred Ancalagon, called the Black, during the First Age to be the greatest and mightiest of all dragons, and the first of the winged 'fire-drakes'. Near the end of the long War of Wrath that pitted Morgoth's hosts against the Host of the Valar, Morgoth sent Ancalagon, leading a fleet of winged dragons, from the fortress of Angband to destroy the Dark Lord's enemies. So powerful was the assault of the dragon fleet that the host of the Valar was driven back from the gates of Angband onto the ashy plain of Anfauglith.
But Eärendil 'The Blessed' in his powerfully hallowed elven airborne ship Vingilot duelled with Ancalagon for an entire day, until Eärendil at length prevailed, pitching Ancalagon onto the triple-peaked towers of Thangorodrim, destroying both dragon and towers. With his last and mightiest defender slain, Melkor was soon utterly defeated and made captive.
Ancalagon was said to have been so large that he blotted the Sun out, even from afar. He was the largest of any dragon to appear in Middle-earth, even larger than Smaug. His length was unknown, though longer than Glaurung or any other ground dwelling dragons. Despite his legendary fire-breath, Ancalagon was reckoned to be insufficiently hot to melt the One Ring, and none of the lesser dragons could do so.
Ancalagon was possibly long-lived like other dragons Melkor bred. So large a dragon would have taken centuries to grow to his full size. The method of how exactly Eärendil managed to battle and slay so titanic a creature is not explained.
After slaying Scatha, Fram's ownership of his recovered hoard was then disputed by the Dwarves of that region. Fram rebuked this claim, sending them instead Scatha's teeth, with the words, "Jewels such as these you will not match in your treasuries, for they are hard to come by." This led to his death in a feud with the Dwarves, and however the dispute was resolved, Fram's descendants "brought few good tales from the north of that folk" (from The Lord of the Rings). Certainly the Éothéod retained at least some of the hoard, and brought it south with them when they settled in Rohan. The horn that Éowyn gave to Merry Brandybuck after the War of the Ring (many hundred years later) came from this hoard.
His name was likely taken from Anglo-Saxon sceaða, "injurious person, criminal, thief, assassin".
In The Lord of the Rings Online: Shadows of Angmar there are several types of creatures distantly related to dragons. There are giant salamanders, wurms (long, quadrupedal serpents) and drakes (smaller, weaker, less intelligent forms of dragons.) There is also an undead dragon in the game, Thorog, resurrected by the forces of the Witch-king of Angmar to aid him in maintaining control over the Misty Mountains. Though not all dragons were mentioned by name in the official texts, names coming from sources other than Tolkien are said not to be "canonical".