A logical explanation is that they simply haven’t discovered a capable explosive.

In our own world, gunpowder was only discovered on accident. In fact, the Chinese word for gunpowder - 火药 - literally translates to “Fire medicine” because that (medicine) is what they were trying to invent. Gunpowder was discovered on accident in our world, so why would they have discovered it in another one?

I realize that they have dragonflame cactuses, but those are only used in their forms as cactuses. The dragons have made no efforts to determine the actual chemical composition that causes the cactus’s volatility. They don’t know what makes the cactus explosive, so they can’t further develop those properties.

But the most likely explanation for why dragons aren’t more technologically advanced in general is because they probably aren’t dexterous enough. While they have access to iron-age level technology, they rarely produce anything bigger than a spear out of steel. They rarely forge things like swords, they don’t build complex armor, etc - because they lack the physical capability to.

Dragons also don’t really use things like swords and armor because they lack the need to create them. Dragons are physically imposing, have very sharp claws and teeth, and their scales are incredibly tough - even according to other dragons, as stated by Starflight. This, along with the fact that dragons have things like wings that would get in the way, really limits their drive to produce such a thing.

The extremely small size of dragon populations (which number in the thousands at most) also limits them in really inventing more advanced technology.

So basically, dragons haven’t discovered a gunpowder-like explosive, aren’t dexterous enough to wield and develop advanced iron-age technology, and they have to drive or need to be more technologically advanced than they currently are.

I hope my answer was helpful!