1 Lambert: You guys realise we still have a pack of hungry wolves to deal with? They may even be dire wolves!
2 Mordekai: Is that "dire" in the sense of ominous, urgent, dismal, or just plain bad?
3 Lambert: Do you carry a dictionary on adventures or something?
4 Mordekai: Did you know neo-otyughs aren't necessarily larger or more fierce, but merely "new" or "contemporary" otyughs?

Dire wolves are a real species of wolf, that lived in North and South America from around 250,000 years ago until its extinction somewhere around 9500 years ago. The most famous specimens are from the La Brea tar pits in Los Angeles, but dire wolf fossils have been found in 20 US states from the Pacific to Atlantic coasts (and it's likely their range covered many more), as well as Mexico, Venezuela, Peru, and Bolivia. Humans arrived in the Americas around 15,000 years ago, so there is no doubt that humans and dire wolves interacted.

Dire wolves are larger than modern species of wolf, but not by very much, and are not as exaggerated as the various animals known as "dire wolves" or "direwolves" in various fantasy works, such as the Dungeons & Dragons game and George R. R. Martin's A Song of Ice and Fire novel series. Presumably they became a staple in fantasy fiction through the route of their appearance as monsters in D&D, in the 1977 Monster Manual.

The dire wolf name actually comes from the Latin binomial name for the species, given in 1858 by palaeontologist Joseph Leidy: Canis dirus, meaning "fearsome dog". So none of Mordekai's synonyms for "dire" are quite correct.

D&D effectively turned the prefix "dire" into a method for describing a bigger and fiercer version of almost any animal. Amongst its many rulebooks for various editions can be found: dire ape, dire badger, dire barracuda, dire bat, dire bear, dire boar, dire corby (i.e. a dire crow), dire crocodile, dire eagle, dire eel, dire elephant, dire elk, dire hawk, dire hippopotamus, dire horse, dire jackal, dire lion, dire maggot, dire puma, dire rat, dire rhinoceros, dire shark, dire snake, dire tiger, dire toad, dire tortoise, dire vulture, dire weasel, dire wolf, dire wolverine.

Dire, dire, dire, dire, dire, dire.

Oh, and for the two types of otyughs, see here.