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They're immune because of Outrage spam. Choice Band Outrage was braindead and put a dent into any team. It's like you niggas forgot about 4drag2mag.
Outrage and Draco Meteor took advantage of Dragon's ridiculous base stats and just sort of overpowered everything. Steel alone can't stop a lot of Dragon-type, but it set up for revenge kills.
Fairies were made immune to void nerfing these powerful moves while still having Pokemon that can easily handle Outrage and Draco Meteor. I feel like the Fairy-type also emboldened Game Freak to start making cooler, weaker dragons you could get at reasonable levels such as Dragalge.
I still think Fairy is too overtuned and too much of a kneejerk reaction to some of the most powerful types. I feel like the Bug resistance was also to nerf U-Turn spam, which as heavily prevalent in Gen 5. It's a good thing most Fairy mons are almost irredeemably shit like Wigglytuff.
A good way they could have kept Fairy in check was to give them a weakness to Psychic, a type that has been lagging behind outside of Expanding Force shenanigans.