Have a look at this thread, which has a list of posts about why Japan successfully modernised but other countries didn't.

Modernisation gave it military, political and economic power. The other side of the question is what gave it it motivation to dominate. I don't have the expertise to answer this properly, but I would say that some factors are:

• the desire to secure resources
• competition with and threats from European empires
• a view that imperialism was part of modernity (since the Europeans were doing it)
• a militaristic culture.

I would suggest an anthropological comparison with Britain, both little Islands in the sea who ended up forming disproportionately powerful influence.

Unfortunately I don't know shit about Japanese History. Although, you may wish to specify when you are referring to when you say dominant. Japan, Like Britain was a backwater little island of farmers and lovely countryside for hundreds of years at a time before doing big fancy things.

The arrival of Matthew Perry and Western influence brought rapid technological advancement in the 17 and 1800's, bringing big fancy guns, modern tactics, formations, arms and armour. This certainly gave a boost to the Islands potency militarily and brought it out of a period of isolation and stagnation.