Thanks - this clears everything up.
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They do have AI, it is programmed to attack the closest building. :p
Dragons are already overpowered as it is at TH8. If you know how to use them, they can 3 star any maxed TH8 regardless of base design. Plan your spells and cc troops accordingly.
Take maxed hogs or maxed loons in cc. Decide between 1 heal 2 rage, or 3 rage depending on the base.
You just have to learn how to use them. When you do a dragon attack its like finding the exit in a maze puzzle. They go to the closest building.
I always tell my clan members or new guys never to attack a corner and to find the center mass of the buildings along an edge. Look for the arrow, a group of buildings basically pointing to the center and drop two pincer dragons. So say one dragon on north east building, one on south east building (so other 9 can't go around outside) and the rest in the center/east. Usually this drives the hord to the center.
There are times whereby the nearest building is defense building but they turn to attack a non-defense building. So, your sentence is not exactly true, but most of the time they do attack the nearest building first.
Having said that, I do agree that dragon should leave as it is, as they are quite powerful imho.