OS X 10.8 Mountain Lion introduced dictation as a built-in feature, presumably using the same technology as Siri’s voice recognition. But it had some serious limitations. Notably, it required you to have an active internet connection because the processing was done on Apple’s servers. And because it was sent off for processing, the results would not show up until after you finished speaking. This is very different from other commercially available dictation software such as Dragon Naturally Speaking, which would type as you spoke.
OS X 10.9 Mavericks introduces a new feature: enhanced dictation. It’s an optional 800 MB download, but it moves the voice recognition to your local computer which allows you to use dictation without an internet connection, and your speech is dictated as you type. This makes it faster and more reliable.
Setup. Go to the Apple menu > System Preferences > Dictation & Speech. Turn Dictation on if it isn’t already, and then check the box for “Use Enhanced Dictation”. Once the download finishes you are ready to go.
Use. Simply place the curser where you wish to insert text and press the Fn key twice. Speak. Press the Fn key again to end. You can use special words like “period” “exclamation mark” and “new paragraph”. Questionable dictation is underlined in purple. Simply right click the purple underlined words to see other things that your computer thinks you might have said. If you want to assign a different shortcut key you can do so in the Dictation & Speech setup.