Role in the episode
In a flashback, it is shown that Nelly was once seen terrorizing Quaintinia and setting villages on fire until she was accidentally defeated by Donald and lost her fire from the water that came from a dam which Donald accidentally and unnoticeably destroyed, thus, allowing the people of Quaintinia to proclaim Donald their hero and new king since their law states that whoever defeats the dragon, is hereby crowned king of Quaintinia.
Years later, after Donald's (now crowned king) return, when Daisy tries to investigate the evil Prince Gaylord's tower, she finds Nelly in the highest room of the tower. Nelly is shown to mean no harm to Daisy when seen smelling and admiring her perfume and shoes but Daisy runs away scared; only to bump into Gaylord and get herself captured.
When Gaylord leaves to find some sweets, which literally bring fire into someone's belly, Nelly has tea with Daisy and admits she's a nice dragon but a bit of "a sucker for gifts," which explains her alliance with Gaylord. When Gaylord returns, Nelly tries to stand up to him: "I am my own dragon. I choose for myself!" as suggested by Daisy; only to fall into serving Gaylord again when he offers her the sweets, which bring back her fire; much to Gaylord's joy. Daisy manages to escape as Nelly spins around excited to have her fire back.
Nelly is next seen setting the villages on fire as she makes her way to regrettably eliminate Donald. Luckily, with Daisy's help, Donald manages to save himself from being burned by offering Nelly her favorite: chocolates. Then, a gift-offering war ensues between Donald and Gaylord until Donald finally wins by offering Nelly the crown, since Donald is sick of being king, and Nelly likes the outfit, therefore, making Nelly the new queen of Quaintinia. When Gaylord furiously demands she torches Donald and calls her a nincompoop, Nelly finally turns against him and sends him running away in flames; never to be seen or heard from again.