Once the only gods that ruled the land, the Dragon Gods have had no connection to the world since the end of the Rage of Demons and the creation of the Divine Gates.
Bahamut and Lunos created holy and arcana magic, gifting it to their creations and spreading it across the land. Tiamat used the Aedra that was created as a result to make magic of her own, creating evil creatures that still plague the lands.