Exaclibur came out of the lake of the Collective Unconscious and empowered King Arthur. Exaclibur, together with the guidance given by Merlin (who came from the subconscious), helped Arthur bring forth order and prosperity in the form of Camelot; the synchronisation and harmonising of the conscious and unconscious. Excalibur symbolically linked Arthur to Merlin.
As Arthur thrived and prospered, so too did the land; he and the land were one.
The Dragon, which Merlin calls forth to power his spells, is an omnipotent entity, a being of pure energy that permeates creation.