Loki has seen all manner of creatures in his life. There was the Serpent that nearly destroyed all of the realms and succeeded in killing Thor. There were, of course, the elves and the dwarves and the faeries and the frost giants and fire giants that made up the entirety of the other realms. There also... well, he attempted to domesticate a helwolf with... disastrous results. Magpies were also an important part of his life. And then there were the rams that could breathe fire...

Well, the point is that Loki is used to seeing strange and theoretically impossible creatures. Therefore, when he comes across Toothless, he's not overly surprised nor is he frightened.

If anything, he moves forward, slowly so as to not startle the dragon. He doesn't particularly feel like being burned to a crisp today. That is what dragons normally do, right? Breathe fire?

He stops a few feet away, hands clasped behind his back and a grin on his face. "Hello Mr. Dragon!"