How do the deaths at Dresden illuminate the theme of fate vs free will?
Because of the perspective Billy Pilgrim gains from the Tralfamadorians, he understands that death is not something to fret about but just something that happens along the timeline of every person's life. Since they will always exist in the past, there is no reason to get bent out of shape. To the Tralfamadorians, these horrible deaths in the fire-bombing of Dresden are no more remarkable than a man passing away in his bed at the ripe old age of 100.
Those who were going to die in that terrible conflagration were always going to die in it, there is no lesson to be learned, no greater sense of injustice or immorality. The Tralfamadorian's response to the war is simply that of ignoring it, they'd rather focus on the positive and happy moments in a life. So too in Pilgrim's mind (and Vonnegut's) the appropriate response to the horrors of war is to try as best he can to ignore it and to focus on other things. This is made easier by the idea that these terrible deaths were simply fate, not the result of choices or happenings but would always have happened.