Dungeon Scaling

Dungeon Scaling also known as Difficulty Scaling, is the mechanism that adjusts the difficulty of quests and non-raid zone adventure areas (but not raids or Epic difficulty) depending on the number of players in the group, the number of hirelings in the group, and the group's composition in order to help smaller parties face a more appropriate challenge. As a result, several dungeon elements are adjusted, possibly including monster spell durations, hit points, and damage output.

Group size
Dungeon Scaling adjusts the challenge of an instance depending on the number of players and hirelings in the quest. Hirelings do not count as heavily as a player character and Gold seal hirelings count even less heavily than a normal hireling. This is done to reduce the likelihood of a player over-scaling him- or herself by accident and to make gold seal hirelings a little more valuable.

Most dungeons are supposed to be balanced for 4 players. Having less than 4 causes the dungeon to scale, while having 5 or 6 causes no additional scaling. That means a dungeon should be easier with a full group. http://forums.ddo.com/showpost.php?p=4618086&postcount=178

Difficulty setting
Dungeon Scaling behaves differently depending on the difficulty setting. Quests on Casual scale more than quests on Normal, which scale more than quests on Hard, which in turn scale more than quests on Elite. Epic quests, quests with Solo-Only difficulty, raid-zone adventure areas and Raids at any difficulty do not scale at all.

Group composition
Characters' classes affect Difficulty Scaling. No data has been given about how each class affects the difficulty of a dungeon, however.

Characters' levels do have a minor effect on Dungeon Scaling.