Wow I can answer this and just ran into this question many years later :) I am reasonably qualified to answer it as I wrote the software in question.
What it is telling you is that your code is not safe to change.
"When the "here be dragons" message is shown it means that the code you are looking at is referenced at a lot of places in the code and no tests seems to be coupled to it or what is referencing it. So changing that code you are risking not only breaking that method but also breaking everything that indirectly uses it."
Is pretty much correct.
What it is looking at is
this code
tests of this code
places this code is called from
places this code calls
tests of where this code is called
recursively
It essentially builds a graph (you can pull up the actual graph visually) of all the related code and the tests associated to that code then does a risk analysis of the code in question. As example on the risk analysis if I have a test that directly tests a method it is considered to be much better than a test that somehow covers a method nine levels down a call chain.
Does this make sense?