Dragonhide is not specifically from dragons, but instead a variety of scale materials made of incredibly durable natural organic materials. They make perfect materials to use in leather armors to replace hide.
In Celestia the best light armor is often made by crafting leather armor with rare dragonhide loot drops. Dragonhide from real dragons has the ‘Resistant to Fire’ advantage., though lesser versions don’t. Rethos dislike Dragonhide and will make negative comments to those who wear it, that seldom stops players though.