Dresden may not have been of immediate military significance, but was strategically important. Almost its entire industry was devoted to armaments production, which was well disperse. In addition, by attempting to break the morale of the German population - as the germans had attempted to do by bombing the UK civilian population - it was hoped the conditions for surrender may be brought about. It was an unpleasant and unpalatable act, but the strategic significance as it was perceived at the time was genuine.
You pull the tigers tail hard enough and sooner or later you get to meet its teeth. I was still in primary school when I figured that one out. It was Hitlers decision to continue fighting when his forces had already been pushed back into his own borders and beyond, no one elses. The writing had been on the wall since Autumn 1944, but it was Hitlers decision to continue and that of his senior staff and officers to obey.