This is very whimsical work.
I especially like the highly stylized hills, although I'[m not entirely certain that I like the way they seem "washed out" because they lack the strong outline of the main characters, but I suppose that does help focus attention on the characters themselves.
I'm very appreciative of the fact that you took the time to actually include all the fine line work on the dragon- it definitely gives it a texture and character which a flat coloring wouldn't provide, but I'm not sure that I'm a big fan of the placement since the strong outline which you've given it, or maybe the positioning of the legs (or both?), makes it look laid over the background rather than a part of it like the hapless farmer Giles.
All in all this is a really great piece.
I'm not sure about the outlines myself - it's the first time I'm doing this, I usually either outline everything with black or color all the lines. This was a solution that came from animation - some cartoons tend to not have ANY black color in the background.
And the dragon is laid over the road, hence the legs. But I see that the pose definitely needs more work if there's confusion.