Rules: Magical Abilities

As noted in the Monster Manual, creatures with innate spellcasting abilities, such as dragons, do not require material components to cast their spells. If a spell has a focus, however, a dragon or other innate spellcaster must have the focus on its person. Dragons can use the Embed Spell Focus feat to satisfy this requirement.
Except for not needing consumable material components, dragons cast their spells in the same way other arcane spellcasters do. They are subject to arcane spell failure if they wear armor. (Their own natural armor does not impose an arcane spell failure chance.) They must provide any verbal and somatic components the spell has, and they must pay any XP cost the spell entails. A dragon typically has a cushion of 100 to 600 XP times its spellcaster level. It can use these XP in spellcasting without risking the loss of a level.
Also as noted in the Monster Manual, a dragon’s caster level for its spell-like abilities is equal to its age category or its sorcerer caster level, whichever is higher.
Although dragons cast spells as sorcerers, they are not members of the sorcerer class and receive none of that class’s benefits (except for spellcasting). A dragon gains bonus spells each day for a high Charisma score. A dragon that becomes a member of the sorcerer class adds any actual sorcerer levels it has to its effective sorcerer level to determine its spellcasting ability, but uses its actual sorcerer level and character level to determine its other class abilities. For example, an old silver dragon casts spells as an 11th-level sorcerer. If the dragon becomes a 1st-level sorcerer, it casts spells as a 12th-level sorcerer, but its familiar (if it has one) has the abilities of a familiar with a 1st-level master.
As noted in the Monster Manual, most of a dragon’s spelllike abilities function as the spells of the same name cast at a level equal to the dragon’s sorcerer level or its age category, whichever is higher.
A dragon with the alternate form racial ability is proficient with all simple weapons. Other kinds of dragons have no weapon proficiencies unless they actually have levels in a character class or they use feats to become proficient.