The Dragon Tennis Match is mentioned very briefly in the game, School of Dragons.
There is no description of how this Annual event came to be. It is presumably an event started after Berk integrated dragons into their lives, so this annual event is relatively new. This game may occur on Berk or the School of Dragons Island.
There is no discussion whatsoever about what Dragon Tennis entails, but presumably it involves at least two dragons, rackets of some sort, and a ball or object functioning as a ball.
Dragon Tennis is just briefly mentioned in a Farm Job description. Farm Jobs are quests of a sort in which the player must grow and harvest the required items on their farms and turn them in to complete the Farm Job for rewards.