Part of a spate of fantasy movies that came out in the very early '80s (along with The Dark Crystal, Conan, and a few more embarrassing ones that I loved when I was, like, twelve), and part of Disney's turn-of-the-decade effort to crawl into the modern world with live action films in genres kids actually liked (The Black Hole, Tron): given this pedigree, it's amazing that it's any good at all. But Dragonslayer is one of the better fantasy films ever made, and nearly thirty years later, its dragon is still the best one ever caught on celluloid.
So, the dragon: it's worth glancing through the description on Wikipedia of how it was done, because it took a lot of work and ingenuity. It's a shame that this film is mostly forgotten today, because it was intended to be a landmark in special effects, and it was. I'm old enough to have seen it first-run, and I can tell you: it blew me, little dragon-loving pre-teen, away. And the dragon still looks good: and not just because they made it convincing, but because they made it look so darn dragony. They got it right. If Peter Jackson's Hobbit ever gets made, Smaug has his work cut out for him.
I really don't need to write more, because the thing's worth seeing just for the dragon. The fact that the rest of the movie works as well as it does is just a bonus.
It's basically a sorceror's-apprentice story, with Peter MacNicol as the apprentice; he's slightly off-center, for a fantasy hero, a little modern, and that works nicely (if you can get his later TV appearances out of your head) with the off-center heroine, Caitlin Clarke; the casting overall does the job, with suitably crusty-looking fighters and florid noblemen.
The scenery is beautiful - lush forests and forbidding rocky mountainsides. It has that fairy-tale-wonder quality to it that a good fantasy movie needs. But for a fantasy movie, it's surprisingly unsentimental about its medieval setting: society is a mix of superstition and venality, religion is powerless, and magic, the only hope, is equal parts ill-understood science, actual sorcery, and pure chicanery. The movie aims for a sweet spot between Lord of the Rings romance and Conan brutalism, and hits it. I've always remembered the scene at the end where (spoiler alert) the king drives his sword into the smoking carcass of the dragon and pronounces himself the slayer of it. That kind of bracing realism about governments, about human pride, can make a deep impression on a young mind.
A gem of a movie.