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Background
After turbulent events during the peace conference of the northern kingdoms, Sile will summon the dragon to defend herself from the knights of the Flaming Rose. As a result, he's a threat to everyone and it's up to Geralt to deal with it. This quest starts after
A Summit of Mages.
Walkthrough
You'll start the quest at
#1, amidst the fire created from the dragon's breath. Follow the only way there is, up the stairs and the way to the tower nearby (
#2).
As you enter the tower, you'll experience collapsing stairway, so move fast. The dragon will try to attack you as well, but it shouldn't really do any harm as long as you move without stopping all the way to the top. Sile will try to make you turn back in a few attempts. You'll also learn that the dragon is called Saesenthessis. On the top floor though, you'll meet her as she's about to teleport. Before making a choice, Sile will explain the role of Lodge in the assassinations and that they had nothing to do with Foltest or Henselt, just Demavend. Also, a few more details are explained about the connection between Letho and the Lodge. You'll also learn that Nilfgaard is advancing against the North again and that a war is imminent.
Strangely enough, one of the diamonds in her megascopes is imperfect and the magic will cause her to explode if you do not remove it. If you remove the diamond, she'll stay alive and tell you that Yennefer is in Nilfgaard, if you ever want to look for her. Then she'll teleport away (after she switched the diamonds presumably). If you decide to kill her, then just stay and watch as she turns into bits and pieces from the unstable magic.
Boss fight
After you decide the fate of Sile, you'll be fighting a dragon. The first fight is on that floor where Sile was and the second is the top if the tower itself.
The dragon has powerful melee attacks and fire breaths. The best way to approach the dragon is when it's breathing fire. Put up Quen and attack it with your strongest attacks/signs until it reaches 50%.
Then it'll fly away and destroy parts of the tower, creating a way for you to climb the rooftop. The second phase of the fight begins. In theory, it's similar to the first one, except that when the dragons starts to fly, you'll need to move to the sides of the tower, to stay below its wings. Once again, try to avoid the hits by dodging away and move out of the fire breath. As soon as it finishes breathing you can do a "free" fast/strong attack before retreating. Repeat until its vitality is depleted.
After the fight, there will be QTEs. When you're about to jump on the dragon, press left-click when QTE appears. You'll be then flying on its back through the forest nearby and another QTE will appear. This time it's the right click. Once you crash, dragon will end up impaled on a tree.
If you got the dagger, Geralt will use it immediately. It will cure Saskia and she'll transform back into human form. You'll have a lengthy conversation over the recent events and there'll also be a reference to the books. Once you're done talking to her, you'll head back to the city to finish the job with the kingslayer.
If you didn't get the dagger, but went to save Triss, its fate is in your hands: you can choose to either slay it or walk away. Congratulations on beating Act III! A short epilogue awaits.
1 - Torched amphitheatre
2 - Sile's tower & dragon