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Unlike his teammates Nightwind and Spoilsport, it appears Dragonwing is among the mutants who have managed to retain their powers after M-Day. At the very least, Nightwind and Spoilsport were mentioned as depowered while no mention at all was made of Dragonwing.
Dragonwing takes on a dragon's strength, reflexes, and durability in the parts of his body that he's substituted. He can shift his arms, head, and grow wings. This allows him talons, sharp teeth, fire-breathing capabilities, and flight. He can also grow a tail, as Paladin explained, for all the good it'd do him.