DragonFly BSD was forked from FreeBSD 4.8 in June of 2003, by Matthew Dillon. The project is "the logical continuation of the FreeBSD 4.x series", as quoted in Matthew Dillon's announcement.
DragonFly has been going through rapid development ever since, working towards the goal of creating a single system image across multiple computers. In the process of moving towards this goal, improvements to the code have been made and changes from other BSDs have been brought in.
Further information on the project goals and status are available on this website, and discussion of the project is possible on a variety of newsgroups and mailing lists.