Scenario: Attacking a base with a dragon. A dragon comes out of the defender's clan castle and they battle over the top of the base.
Question: While the dragons are fighting, is my dragon also doing splash damage to the buildings below?
No because the Dragon can only have splash damage against a cluster of enemy troops/walls. A quote from the Clash of Clans Wiki:
Dragons have no preferred target when attacking; they will simply attack the closest building to them. However, once they become aware of enemy Clan Castle troops, Heroes or Skeleton Trap skeletons (either by being attacked themselves or being near another friendly troop under attack), they will leave their previously targeted building and engage the enemy troops instead. Once all of the nearby enemy troops are defeated, they will proceed to attack the nearest building from their current location.
Which means that if it targets enemy clan castle troops, it can only damage the targeted clan castle troops and any other troops near enough to the targeted one and is of same level (ground or air). This means that when attacking air clan castle troops, the splash damage will never affect the buildings below it.
No.
The splash range for a dragon is 0.3 tiles which is a tiny area. I doubt that it would damage ground defences whilst also attacking air.
From my own experience, being similar to the wizard tower which also deals splash damage to ground and air attackers. Say for example a wizard tower is being attacked by minions and archers, the attackers will not all take damage at the same time. First the ground (or air) troops are killed and then the others are targeted.
Sadly no, because the dragon cannot do Air Damage (opponent Dragon) and Ground Damage (Defensive buildings) at the same time.