The Root of the Behavior
In the early stages of puppyhood, puppies make use of their litter mates and their mother to find their way in the world. During this time, they learn about bite inhibition, a skill that allows them to cohabit peacefully with human beings and other animals. It is but one of many important lessons they learn during the critical first 12 weeks of life.
Because puppies cannot speak to communicate, they begin exploring the world with their mouths. Long before they can really bark, they use their mouths to express themselves in play. Young puppies love to engage in play fighting, and it is at this time that they learn their own strength and how to utilize it safely. Their litter mates are quick to teach them when a bite given in play is too much, and because the puppies are at their peak learning time, they use this information to adjust how they use their mouths in play. After all, the desired result for the puppy is to continue playing, so anything that inhibits his litter mates from wanting to do that, he is going to avoid doing again in the future. This is but one reason why puppies should always remain with their mother and their litter mates until at least 8 weeks of age. It is vital that they not miss this critical learning time that cannot be replicated by a human being alone.
Since man began the process of creating dog breeds many years ago, dogs were bred with specific jobs in mind. Many of the dog breeds we have today were originally intended to assist their owners on a hunt. For dogs like Terriers, their role in the hunt was to go to ground and source out quarry for the hunter to shoot.
Encouraging the Behavior
But many dogs are also excellent at rooting out rodents as well. They instinctively know how to kill rodents in the most effective and humane manner. When a dog finds prey and kills it, the dog generally grabs the animal by its neck and gives it a quick but fierce shake to snap its neck. This one action is sufficient to end the animal's life in as painless a fashion as possible. Though our modern day sensibilities dislike this instinct in our animals, it has been hardwired into many of today's dog breeds through years and years of selective breeding to produce and preserve these traits.
For our dogs, the act of doing the job they were bred to do is immensely satisfying. Dogs are very intelligent and are able to determine between what is prey and what is an animal intended for their companionship. Because working alongside their human companions in a hunt is intensely gratifying for them, dogs choose to engage in mock "hunt games" with their canine friends as well. Though they can frighten us with their volume and seeming intensity, they are very controlled games intended for fun only.
If we closely observe dogs at play, there are signs that tell us when behavior is friendly and when it is potentially dangerous. Learning these distinctions are very important. All it takes is one dog fight to cause lifelong behavioral problems and fears in a dog, so a little bit of caution now will save a lot of heartache and work later.
The best indications that your dog is simply having a good time with his canine pal are a relaxed body posture, a dog that spends equal amounts of time being "dominant" and being "dominated," play bows, and a happy, playful stance. If your dog backs off then returns for more of the "play", your dog is having a good time.
It is good to bear in mind though that even dogs who are enjoying their play time can become over aroused, so this type of play must always be strictly supervised and interrupted at the first sign of trouble.
Play that is taking a turn towards the serious is characterized by several different behaviors. One of the biggest indications is that one of the dogs involved doesn't seem to find the play to be fun any more and attempts to disengage or even exhibit submissive behavior such as rolling over on their back.
Other Solutions and Considerations
Interestingly enough, just because one play session goes awry doesn't necessarily mean that the same two dogs cannot play together again. As with all play, the onus is on the owner to supervise well to ensure that things don't get out of hand. It is always better to interrupt a game of play a little too early than to wait a little too late.
Should you see any signs of overt aggression at all, safely separate both dogs and seek veterinary advice. There may be a medical issue causing the behavior. If aggressive behavior occurs more than once with your dog, do not allow your dog to play with other dogs until you have sought advice from a professional trainer and have begun behavior modification training to ensure the safety of your dog and those he plays with regularly.