As mentioned before, Dragon Bridge is located near the Karth River Estuary, which is north of town. If you were to travel to Solitude from Markarth, then you will have to go through Dragon Bridge before heading into town. The main road goes through town and because of this, houses and inns are located on this stretch of road. A lumber mill is located on the southern end of town, and it uses the waterfall to work the mill.
In the area near modern-day Dragon Bridge, the Ancient Nords built a bridge resembling a Dragon, and this became a significant landmark in the area. Many people decided to settle near the bridge, and it formed the town of Dragon Bridge.
During the Imperial Simulacrum, the Dragon Bridge township existed in Skyrim in between the towns of Solitude and Markarth Side. At one point, the Eternal Champion had visited the town on their quest for a piece of the Staff of Chaos to defeat Jagar Tharn at the Imperial Palace.
The town of Dragon Bridge was under the control of the city of Solitude. The town provided lumber to Solitude with its lumber mill. Whoever had control of Solitude, they had control of the Haafingar region and Dragon Bridge. When Emperor Titus Mede II traveled to Skyrim, the Penitus Oculatus had an outpost in Dragon Bridge.
Varnius Junius of Dragon Bridge reported strange occurrences in the nearby Wolfskull Cave that has scared off people in Dragon Bridge. Jarl Elisif the Fair in Solitude took note of the incident and sent the Last Dragonborn to investigate the cave. It was revealed that a group of Necromancers, possibly from the Horme group of rebels, were resurrecting Potema Septim, the Wolf-Queen of Solitude. The Dragonborn defeated the Necromancers and saved Dragon Bridge.
In Solitude, Vittoria Vici was assassinated during her wedding by the Dark Brotherhood of Skyrim resulting in the Penitus Oculatus upping the ante with their defense. The Brotherhood was tasked to frame Gaius Maro by killing him and leaving an incriminating letter from him supporting the Stormcloaks. Gaius left Dragon Bridge to never return again.