There are currently 2 elements in the game, and 5 planned in total. Dragons, Drakes and Wyverns utilize these elements in combat and nesting.
Acid
Using an acid elemental attack against an enemy will make any affected target take damage over time.
Fire
The fire element breath produces a cone of flame for a medium-damage, Area of Effect attack.
Ice
It is unknown how ice attacks will work.
Lightning
It is unknown how lightning attacks will work.
Plasma
Plasma users are be able to fire precise shots of plasma for high damage attacks on a single target.