It all starts with Wurms. People hardly ever see them, since they live in dirt and dig really really fast. They're asexual and aren't at all intelligent -- don't even have nervous systems. They can live for hundreds of years and grow to a couple feet long. Only one in a thousand moves to the next stage.
Spawn look a lot like lizards and have reptilian nervous systems. They are pretty nasty predators, and most intelligent races kill them on sight. Spawn mate and lay eggs, and if this happens, they pretty much stay as spawn the rest of their lives. Lone spawn get bigger and bigger and eventually one of two things happen.
If there isn't much food, the Spawn become bipedal, sprout feathers and scaly armor, and become intelligent. This is where Trodons come from. Trodons are male or female, but are sterile. They can grow to be very intelligent, but have no true society of their own.
If there is a lot of food, they stay four-footed, keep growing, and eventually become Dragonelles. Maybe one Dragonelle in a thousand eventually becomes a true Dragon.