No it means that you not only have these red forcefields your dragon isn't able to pass but also you can't target enemies on the ground. To bad I was hoping for instant fly-burn with enemies.
You've gotta be kidding me...
The last game I've played that was involving (useful) dragon flight was Drakan. While on it can attack enemies and siege weapons on the ground, and of course other nasty dragons which were usually a good challenge. Problem with that game was when you left the dragon to wander on foot, it can die and you would to. Though it the monsters that attacked it were melee, it would automatically fly up in the air and fry them.