There's a lot of control. (The torture's pretty related to the control, actually, more punishment for stepping out of line and warnings not to step out of line than whatever other reasons there could be.)
Wow! Wow!!!
Once the light reaches them, people have a lot of reactions. People call to their friends and neighbors to come look. Pictures go up all over every social media site, are sent by every means of messaging. People on the night side of the world crowd outside; people on the day side of the world stare at pictures and start looking outside as night starts coming in. (Some people in cloudy areas are very disappointed.) (Claims that this is a hoax are soon mostly buried under the amount of reporting coming in, relegated to a few conspiracy theories here and there).
Amateur astronomers publish nicer images, some with theorizing. Space agencies are soon putting up some of their own.
There's a lot of theorizing. Top theories include 'natural physical phenomenon we hadn't previously run into in this form', 'cosmic magical phenomenon!' (reading these one might gather that there is generally a lot of disagreement and not much settlement of it with respect to the nature/properties/actions of magic outside of local level), and 'aliens!'. (The first two tend to be accompanied with various notes about human tendencies toward pattern finding and how that would lead to the popular interpretation of 'dragon'.)
Reporters start putting out articles - there not being much else that can currently be said, these tend to be focused on the pictures, the social reactions, and some amount of citing of various theories and which credible or less credible people are extending and coming out in support of them.
Governments, after some flurried various-amounts-of-covert establishing that it doesn't seem like any of them are responsible for this, make various generally vague but potentially inspiring statements about science and the future (and sometimes national readiness, and sometimes reminders about various public safety guidelines and why they should still be abided by.)
(Some people do ascribe the phenomenon to the divine in one way or another. Mostly whatever divine is already their own. A few cults that got lucky in their symbolism and/or date predictions see their hits go up.
Some people are very freaked out about this sign of the end times/powerful aliens that are coming to kill everyone/dragon that will eat the planet.
Pretty much no one really arrives at the 'new management' conclusion.)
Lots of observatories and space agencies write lots of letters and grant applications about the new funding they should clearly get to look further into this phenomenon. They need more/better/adjusted observation devices and data processing / mages and mage time to improve the previous. Several organizations think this is the time to renew their argument for lots of mages and mage time for speculative scrying experiments. Various governments/foundations/individuals find these arguments and/or the giant sky dragon persuasive; lots of space agencies get funding spikes.
Various important military authorities have a lot of mostly clandestine meetings and initiate some mostly readiness-themed actions.
People process a lot of data. People do a lot of math. People write and draw a lot of imagined stories about the imagined dragon-liking aliens. People try to send messages to aliens.
Some mages who are outside at night for various reasons see the dragon; some mages in countries where mages are allowed to watch tv watch the reporting. Some mages outside at night get distract by the dragon and are punished to varying amounts depending on the mood of whatever guard is around them.