In the context of that text that was linked, Dagon was a Leaper King in cahoots with Lorkhan (called the Greedy Man in the text) to stop Alduin (right?) from destroying the current incarnation of existence.
Their trick failed and Alduin threw Red Mountain on top of Lorkhan. If you combine info from Mankar's school of thought, Dagon and Lorkhan are friends and Dagon wants to free him and return himself to his Leaper state.
Yup, but I guess we should be careful with the fact that we come to that conclusion, like 946K said,
in the context of that text.
It gives another dimension to Dagon, one which was never introduced before. Some people could choose to disregard it, though.