Revelation 12:3
And there appeared another wonder in heaven; and behold a great red dragon, having seven heads and ten horns, and seven crowns upon his heads. And there appeared another wonder in heaven; and behold a great red dragon, having seven heads and ten horns, and seven crowns upon his heads.
In vision John was shown a great red dragon with seven heads and ten horns as a symbol, not as a literal creature actually dwelling in heaven. The dragon chiefly means Satan himself, the leader of the rebellion against heaven, working on earth through human agents and governments rather than in person. In a lesser sense it means pagan Rome as his chief tool among the nations in the first centuries, even moving Herod to try to kill Christ at His birth. That same power carries on war to the close of time against God's faithful minority, the remnant who keep His commandments and hold to Jesus, until Christ triumphs and Satan and the wicked are finally destroyed.
Vision Setting and Symbol
What John beheld was a symbolic vision of a great red dragon with seven heads and ten horns appearing in heaven, not a literal monster physically present there. A visionary scene can show something as in heaven without placing it there as a literal, physical being in the New Jerusalem. The heaven in which the dragon is seen was a prophetic view presented to John in vision, not proof that Satan as a minister was actually in heaven in the New Jerusalem.
The dragon primarily represents Satan, the instigator of the great rebellion against heaven. He works on earth through human agents and governments rather than appearing in person. In a secondary sense the dragon represents pagan Rome, because it was Satan's chief agent among the pagan nations in opposing the gospel during the first centuries of the Christian era.
The same symbol allows the dragon to represent Satan working through other powers that carry out his designs. Satan sought to destroy Christ at His birth by moving Herod to kill Him. The real inspiring power behind that persecuting work is the dragon identified in Revelation 12:9, also seen in Revelation 12:17. It worked through pagan Rome in one instance and through the later government described in Revelation 12:17 in another, with the Herodian rulers showing the same persecuting spirit operating through different rulers.
Prophetic Conflict and Triumph
Revelation 12:3 belongs to the apocalyptic vision of beasts arising from the union of church and state, and such unions become destructive powers that persecute and crush those who oppose them. In that vision the great red dragon is a symbol of earthly governments especially engaged in trampling upon God's law and persecuting His people. Together with the leopard-like beast and the beast with lamblike horns it carries on war against the people of God till the close of time.
Those powers are controlled by Satan through paganism and the papacy, through which he destroyed God's faithful witnesses. Under Rome they were tortured and killed for more than a thousand years, until the papacy lost its strength and was forced to stop persecuting them. In that war God's people are symbolized by a holy woman and her children, are greatly in the minority, and exist in the last days only as a remnant keeping the commandments of God.
That remnant also has the testimony of Jesus Christ, holds with unyielding firmness to obedience in the face of oppressive powers that seek to force them into disobedience, and gains final triumph over the beast and his image. The verse belongs to the portrayal of the last great conflict between the obedient and the disobedient, in which there are only two parties on earth, those who stand under the bloodstained banner of Jesus Christ and those who stand under the black banner of rebellion. Those who stand under Christ's banner bear the sign of obedience spoken of in Exodus 31:12-18.
The verse belongs to the prophecies of Revelation 12 to 18 that are being fulfilled in the giving of the last message of warning that all are to hear. Its course runs through the last call to the churches in the eighteenth chapter and the taking of the beast and the false prophet and casting them into the lake of fire in the nineteenth chapter. After that Satan will be bound and cast into the bottomless pit for a thousand years, after which come the resurrection of the wicked and the final destruction of Satan and all the wicked, ending in the final triumph and reign of Christ on this earth.