"What kind of dog do you have?"
Translation:Wat voor hond heb jij?
It's just wrong, prepositions simply work differently in different languages. Your sentence sounds like What kind from dog do you have? sounds in English.
Can someone explain, how 'wat voor' in this case means 'what kind'. In other words, what would be the literal translation of the dutch sentence?
A literal translation doesn't make sense here. Wat voor + type/name means What kind of type/name.
like in German... :-) I'm French, and fortunately I speak German.... it is huge help !