The dragonblood have a violent history. The dragonblood, at one point, were the majestic dragons that once soared the skies. However, as humans expanded, they continued to bump into them. The dragons, fiercely territorial, made quick work of the primitive humans. However, the dragons who reproduce quite rarely, rapidly became outnumbered by the humans who more and more needed to expand. It was inevitable; the humans needed the resources the dragons kept them from merely because it was on their territory.
The humans, though weak and tiny compared to the dragons, were adaptive and quick to think; they started exploiting the dragons weakness; their wings and clumsy combat skills on land. Developing magically-imbued arrows, they shredded the dragons wings while in flight, brought them to land, and used nets and siege engines to strike them while they were vulnerable. Added with the massive numbers advantage the humans had, the dragons quickly fell.
Over the course of the war, the dragons began to lay more and more eggs to bolster their numbers. Ironically, it were the runts that survived; the big dragons with massive wingspans were quickly taken down. And so, the Dragons rapidly devolved into what are now the Dragonblood, named in honor of their grand ancestors. They have diminutive sizes, not much bigger than humans, and small wings incapable of flight.
Some Dragonblood have bred with humans, creating very human-looking Dragoonblood. These people, much like half-orcs, are rare and looked down upon by true Dragonblood. However, they are strangely popular in human cultures, unlike half-orcs or half-dwarves which are generally unaccepted in either culture.