|• Breath attack|
• Counts as Dragon
• Immune to level 1-3 spells
• Immune to Fear
"Little is known of the Azure Dragon. It is both rare and mighty, thus few have seen it, and fewer still have survived its attacks. This powerful creature is not much bigger than most dragons, but is said to be capable of enduring prolonged physical attack. It is said those standing face-to-face with an Azure Dragon tend to freeze from pure fear." AB manual
Fear special ability
Azure Dragon's fear special ability is a passive ability, which means it does not require any specific action from the stack. The fear may occur only at the beginning of enemy stack's turn, causing them to freeze in fear of the Azure Dragons and effectively lose their chance to act that combat round. The working principle is very similar to bad morale.
Creatures immune to fear :
Azure Dragons were added in Armageddon's Blade so there are no Azure Dragons or Frozen Cliffs in Restoration of Erathia. They also appear at the end of the Azure Dragons scenario from the Dragon Slayer campaign in Armageddon's Blade.
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Like all the neutral creatures, they cannot be upgraded. Azure Dragon have the highest attack, defense, damage and health values of all the creatures making them arguably the strongest units in the game. Placing Azure Dragons (as well as any living Dragons) in the Skeleton Transformer will give you Bone Dragons instead of regular Skeletons. They are also the most expensive unit in the game.
Azure Dragons have the highest AI Value of any creature, with 78845.
Even though in the game files themselves the Azure Dragon and other neutral dragons are considered to be level 7, the official editor shows they are level 10 (8 for Faerie Dragon). This is either due to code limitations and impossibility of creating a unit with tier higher than 7, either because the developers didn't have time, motivation or reason to add a new creature level in the game code and invest time in that, just telling us they are level 10, respectively 8. As such, even now their levels are still being debated.
The Azure Dragon has the highest defense and health stat in the entire game. In the early game, this creature is almost impossible to defeat without Mighty Gorgons.
This dragon's offensive powers are also the highest in the game. However, its damage stat compared to their growth might be too little in many cases.
Efficiency and cost
They are totally worth the cost, especially since you will usually have the possibility of recruiting them in mid-game, when you already have a decent army. A few Azure Dragons are very good to strengthen your army for their cost. However, don't buy them if your enemy is Fortress, maybe just one for their Fear ability. The Mighty Gorgons will kill weeks' worth of them. Also, it's very hard to kill Azure Dragons who guard Frozen Cliffs without major losses.
The Azure Dragons can be used in various ways, especially due to their speed and toughness. You can block shooters, use-up retaliations or even defend your own shooters. However, keep in mind that in late-game, the opponent might be able to dispose of them relatively easy, with its own troops or even Implosion. But they can be Resurrected, on the other hand. Additionally, their ability to spread Fear among the enemies, causing them to freeze and lose their combat round action, can turn the tide of the battle.
You shouldn't make your strategy around them, since they are already insanely good creatures. But maybe Offense would complement for their relatively low damage.