A title conferred on several British chiefs in times of great danger, when they were invested with dictatorial power: thus Uter and Arthur were each appointed to the office to repel the Saxon invaders. Cassibelaun was pendragon when Julius Caesar invaded the island; and so on. The word pen is British for head, and dragon for leader, ruler, or chief. The word therefore means summus rex (chief of the kings).
So much for fact, and now for the table: Geoffrey of Monmouth says, when Aurelius, the British king, was poisoned by Ambron, during the invasion of Pascentius, son of Vortigern, there “appeared a star at Winchester of wonderful magnitude and brightness, darting forth a ray, at the end of which was a globe of fire in form of a dragon, out of whose mouth issued forth two rays, one of which extended to Gaul and the other to Ireland.” Uter ordered two golden dragons to be made, one of which he presented to Winchester, and the other he carried with him as his royal standard, whence he received the name of Uter Pendragon. (Books viii. xiv. xvii.)
Source: Dictionary of Phrase and Fable, E. Cobham Brewer, 1894