My interpretation:
Akira (hero) picked up the child and took her(?) to the village in the hopes that the villagers will give information.
(pg.9) Akira was asked to defeat the dragon, presumably by the child (pg.25/30).
Villagers have made a trade deal of sorts with the dragon and they sent the child to the dragon in return for scale, etc?
The party were making a plan to distract the dragon for a surprise attack, but the dragon showed up earlier than expected.
Akira wanted to ground the the dragon with a magic attack, but the dragon taunts her with the dying body of the child.