Ok, first of all, this little dragon, with his tininess, little bug eyes, mischievousness, and expressiveness reminds me of my little chihuahua dog. Furthermore, the little dragon is rather ostracized from his porcine family group, and he's got some measure of vunerability that the children in this story zero in on. Kids like and identify with tiny creatures that need someone to love them and care for them, and kids like cuteness and mischievousness. They empathize with vunerability. I think that it's for these reasons that my niece and nephew liked the little dragon in this story right away.
I liked this little dragon right away, too, but for me it was the wonderful illustrations that warmed me up to this book. A beautiful color palette, great, expressive drawings, and the way the illustrator captured the sweetness of the children and the personality of the dragon made this book enjoyable for me. Also, I'm not generally a big fan of bittersweet stories, but it really works for this one.