He just places the dog and it immediately goes for the cat and drives it off. What we see is the kids imagination of Dogzilla coming and fighting the Meowthra, but because the dog is well behaved to his master, he wont fo full on the city like the cat does ( only does it on the cat and droves it off). Dogzilla becomes the savior of Ninjago, something a Dog owner w that plays with Legos would do. He stages the whole play session so that the cat is the villain and the dog is the hero....cause i dunno, he likes the dog more and dogs are better mans friend than the more wild indipendent cats...similar type of kids imagination we saw with lego batman where a kid imagined an earthquake scenario by just moving the tables.
Also I disagree on the instinct thing, a trained dog can and did go for this that their masters ordered them to go to, thats the entire point of police dogs, war dogs, and any other dog for any field they are used for. Trained dogs do a lot of stuff that arent necesseraly based only on instinct or at instinct at all, thats why they are trained dogs.