We don't. We know that they had a special connection with the wolf, that they used its head (with a snake's body) as a battle flag because the sound that passed through it held some kind of a "fear" factor. But this is where the ancient texts stop.

Of course, we can discuss it in a more relaxed manner. Strabon called the dacians "daoi", which some called "wolf" in the Phrigian dialect. There are later religious rituals that are obsessed with lycantropy and might have existed during the Dacian period. Even the wolf's head onto a snake's body seems to have evolved into the image of a dragon (or balaur in the Romanian mythology). But it's hard to tell, seeing that few texts survive about Dacians (not to mention that their mythology is different, from author to author).

My personal opinion is that it was a symbol, a military/religious initiation type of symbol, borrowed from Sarmatians. The ritual, meant solely for warriors, might have had something to do with dressing up as wolves and living in the woods, as part of the process.