The 'dragonscale armor' skill is based on a knowledge of crafting leather armor and the anatomy of dragons. It allows scales to be harvested from dragon corpses and crafted into armor with the 'leathercraft' skill.
Dragonscale armor is made at your warrior level (or the level of the skin, whichever is lower) and is warrior-flagged. Like leather armor, you can make dragonscale armor on behalf of others, though it will be at their warrior level, or yours if their warrior level is higher.
Dragon scales tend to be tougher than the skins of most beasts, and are always resistant to breath attacks. Different varieties of dragons will yield scales with different resistances consistent with their natural properties.
Dragon scales, being more rigid than leather, can be crafted into effective shields.
See also 'leathercraft'