@Mozart
Dragons were basically the only things that could beat another Dragon in Japanese mythology. It also adds to the extra connotations of royalty and emperor-hood, what with Outrage being in Japanese "Imperial Rage": thus only another imperial power could defeat another power. Which is why they had to go for a more European-inspired typing (Fairy) to nerf the Dragon-type. In fairy tales and many European lore, dragons were seen as evil and not majestic. While it is true that those same tales also said that dragons were immune to magic, Fairy also has the affinities of supernatural Light, thus bringing in the "holy" connotations from a theoretical Light-type to justify Fairy being immune to Dragon.
My ramble about the Dragon-type also brings onto the table another point of possible discussion. It's not just the literal connotations of a typing, it can also be the extensions of logic that can be found in typings, like Fairy carrying supernatural Light-connotations.
For example, Electric is the most fitting type to carry the scientific and literal sense of Light, and it also matches up successfully well with Electric's type effectiveness.
Lets say that there was an Electric-type move called Light Ray.
Under the type chart, this move would be:
Super-effective to Water and Flying.
Water - Direct light can evaporate water.
Flying - Light can easily blind and frighten many bird species, plus the sun's ray heating the air causes it to circulate constantly.
Resisted by Grass, Electric, and Dragon.
Grass - Plants absorb light easily.
Electric - adding the same element just makes more of the original substance, and also solar panels.
Dragon - Dragons in Japanese lore were commonly associated with the rising sun and candles, and in other cultures general lore, if you could see it, it can see you.
Blocked by Ground because the earth easily absorbs the light, and this benefits all inhabitants of the earth, including plants, earth-feeders and tons of dirt-related bacteria. Plus early common materials like sand and mud were used to build houses and protect the skin from harsh sunlight.
It's really interesting when one explores the other connotations that a typing brings to the table. I'd love to talk more about this when I have time, like how Bug is technically the Alien-type what with the move Signal Beam, or how Ground could be compared to mass armies or war tactics, or even how Fire is the old Christian connotations of hell and punishment, what with Inferno being called "Purgatory" in Japanese, but for the mean time, I'd really like to see what other people think about these sort of things.
Or maybe I'm just reading into this too much, lol.