There are many third-party apps out there that let you dictate on your Mac. Dragon Dicate is one, but it costs $199, and includes a ton of extra stuff, like controlling your Mac with your voice. If you just want to talk instead of type, say in an email, Tweet, or Facebook status update, you already have what you need built right in to your Mac running OS X Mountain Lion.
First things first: you need to enable Dication. Click on the Apple menu and select System Preferences. Click on the Dictation & Speech icon to open that preference page. Click on Dictation at the top, if it’s not already selected by default. Set Dictation to On, then click on the Shortcut key to change which key presses will enable the dictation system. I chose Press Right Command Key Twice, as my Fn key is used to have F-Key functionality on my Macbook. If you use a microphone with your Mac, click on the drop down menu under the Internal Microphone area to set the input device to your mic. You can also just start dictation in an application in the Edit menu. Choose Start Dictation, and then do just that.
Apple notes that you can speak continuously for up to 30 seconds at once; that’s a lot of typing you’ve just avoided. The little purple meter inside the picture of the microphone is actually an indication of how loud your voice is. If it’s too low, move closer to your mic, speak louder, or use an external or bluetooth microphone to increase the signal to noise level.