The meaning of the expression "Never laugh at live dragons"
Solution 1:
You normally laugh when you think you have defeated the dragon, in this case, you feel you have triumphed over it.
However, one doesn't know if the dragon is defeated until it's truly dead.
So it could mean: don't celebrate until the danger is truly gone.
Solution 2:
I personally think it has a pretty literal and straight-forward meaning like,
'Do not laugh at a living monster.'
Maybe it simply says to -
Be cautious of real danger.