The Decoy was built by the Great Gummies to frighten away intruders by leaving behind dragon footprints everywhere, and since Gummies and Dragons were good friends, Dragons allowed to have their feet modeled for the mechanical dragon foot that would make the prints.
After the Gummies left for New Gumbria and the other colonies, the Dragon Decoy was left behind in storage at Gummi Glen for hundreds of years, until it is rediscovered by Zummi and Tummi Gummi. Tummi accidentally switches it on and starts hopping all around the forest, out of control, spreading fear of a Dragon to Sir Tuxford, Unwin, and the knights of Dunwyn Castle.
When Tuxford begins a dragon hunt, Tummi uses the Dragon Decoy to lure them away from the actual dragon. He jumps out moments before Tuxford and his men have a chance to destroy it by dropping a huge boulder onto it.