What can you tell me about those ships and dragons that attack the city? Why did they attack?

Those ships belong to the Empire, a civilization that rose from the ashes of the Ancient Age and used the weapons and technology that were left from the Ancient Age to reclaim the land from the bio-engineered monsters. Although the Empire has suffered major defeats in the previous games, they were always able to rebuild themselves by using the accumulated knowledge from their Imperial Academy, which had remained intact.

During the Great Fall (which happened after Panzer Dragoon Saga), the Tower network was deactivated, causing a major disturbance in the planet's ecosystem and decimating half of the Continent's entire population. But with the help of a neighbouring island nation, the Empire was once again able to rebuild. After discovering a functional drone named Abadd, they were able to reactivate an ancient armament facility known as the Cradle, capable of creating bio-engineered monsters. Soon after that, the Empire had created their own dragons, called dragonmares.

The attack on Yelico Valley was the first real test for the first five dragonmares. Their objective was to capture Orta. In fact, the drone that operated the facility, Abadd, had disappeared, so they needed another drone to control the Cradle and finish the second batch of dragonmares. There's a possibility that they didn't need Orta just to activate the Cradle however... See the FAQ on episode 3 for more information on that subject.

That dragonmare looked like it was going to kill Orta, just before the other dragon stopped it. Didn't they need her alive?

No, perhaps they didn't. My theory on why the Empire wanted Orta can be found in the episode 3 FAQ.

Ok, so where did that other dragon come from that saved Orta?

Meet Lagi, the same dragon of all the previous games and the only dragon that existed to destroy the Towers. Although Lagi had accomplished his original goal, the deactivation of the Tower network, he still decided to exit the Sestren data circuit and return to the surface world. The how and why about his decision is explained in greater detail in the Episode 7 FAQ.

Have I missed something? Where did Orta's gun come from?
Added by Lance Way

D-Unit: In my opinion, some details may have been left out of the FMVs. In fact, the gun is never showed in any of the FMVsm which leads me to believe the absence of the gun is simply a plot hole. It's possible the FMVs were finalised before the developers decided on such details.

Did the Imperial Assault Carrier Vermana attack Orta, or did Orta attack the Vermana?

The Vermana ultimately crashed due to the core being damaged. Those who played Iva's story, may want to consider this: the fact that the Vermana transported the dragonmares, means that the scientists that built the dragonmares were likely stationed on the ship as well. Although the Vermana was a formidable battleship, it wasn't meant to get into the heat of battle. I think it's possible that it was during that crash that Iva's father died. The question can be asked if Orta's actions were really out of self-defence.

Who's Abadd and why did he save Orta from the dragonmares?

Although Abadd's intentions with Orta were unclear at this point, they changed shortly after this event.