Be sure to check out the Fake News and Palette Swap teams in today's issue of The 'Shroom! Wallace Ulysses introduces us to Waluigi's troublemaking relatives in Character Parade, and Waluigi himself is going egg hunting in the aftergame in Passion of the WAH - Part 1!
As for the fight itself, it depends on how comfortable you are with the controls and game jank. You should definitely have a bow and enough arrows because you'll need to hit some remote targets in the air. Diamond armor would be helpful too, and some healing options are a good idea as well. Optionally you could bring some empty bottles if you want to collect dragon breath clouds that'll be left on the ground during the fight.
Beyond that the dragon isn't really a big deal. You definitely have to go way out of your way to enter this fight, so if you don't want to do it, you can just keep playing the game normally. This isn't something you can stumble into accidentally.