Leinster, the reigning Heineken Cup champions, were humbled 45-20 by Scarlets in the first round of fixtures but responded superbly to run in five tries while fly-half Ian Madigan kicked 18 points.
The bonus-point win took Leinster up to eighth in the RaboDirect PRO12 table but more importantly kept them within four points of early leaders Scarlets.
But, despite the flowing performance, Schmidt insists Leinster need to tighten up if they are to avenge last year's RaboDirect PRO12 final defeat to Ospreys.
He said: "That's something we're going to have to do better. That's ten tries we've conceded in two games and that's something that doesn't sit comfortably with us.
"I thought bits of the first half were really productive, we were maybe unlucky not to score another couple of times.
"It was great to get our five tries, that allowed us the bonus point and means we keep in touch. We needed to win to stay in touch so we didn't get too far off the leaders."
Andrew Conway set Leinster on their way with a seventh-minute try although Steffan Jones quickly hit back for the Dragons.
But Leinster began to run riot and led 26-13 at the break as Madigan kicked 16 first-half points and Ben Marshall also crossed the whitewash.
Fionn Carr, Shane Jennings and Brendan Macken late on also crossed for the Irish outfit although Dan Evans and Tom Prydie responded for Dragons.
And Schmidt praised his opponents for their energy and commitment and expected it to be a good learning experience for his young side.
"The Dragons are a really difficult team to play against, you don't get a lot of time and space to play," he added.
"Some of the younger players felt very crowded and hurried a few things. At the same time, there were some good snippets of play that gave us the opportunity to score a few times."
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