Macworld has done an interesting comparison of two different dictation offerings available on your Mac: They've looked at the core dictation service available in the latest version of OS X, Mountain Lion, and compared it to Nuance's classic Dragon Dictation service, comparing the two in terms of ease of use and accuracy. And the results are basically what you might expect: Mountain Lion's dictation offering isn't bad, but if you really want to try depending on dictation for longer and more regular tasks, it's probably worth buying into Nuance's dedicated solution.
Mountain Lion's dictation is fairly easy to try: Just hit the Function key (Fn) on your keyboard twice and start talking. As Macworld notes, it will work with your Mac's built-in mic, but if you really want to use it accurately, it's probably worth investing in a close-up mic that will pick up your voice more clearly and catch certain speech inflections. Unfortunately, the core dictation functionality will only work for about 30 seconds, so it's probably better to grab Dragon if you want to pull off longer texts.
Though the sample size is relatively small, Macworld found that Dragon had fewer misses in accuracy, and was more able to pick up on special pronunciations and words than the core Mountain Lion software. Which makes sense -- Nuance has been doing this for years, and the Dragon software is designed to follow this focus. Plus, the Mountain Lion dictation app is built-in for free, and the Dragon software starts out at $149. You can pick it up on the company's website.