Starting with OS X 10.8 Mountain Lion, your Mac could take dictation. But, just as with the dictation feature on iOS, the OS X incarnation required an Internet connection, couldn’t show its progress while you spoke, and could only listen for about 30 seconds at a time.

That all changes with a single checkbox in Mavericks (OS X 10.9). Fire up System Preferences and click on the Dictation & Speech pane. There, you’ll find a checkbox for Use Enhanced Dictation. The first time you check it, you’ll need to wait out a hefty download (between 700 and 800 megabytes), but once you’re done, you can dictate a lot more freely.

Now, transcription happens on your Mac, not Apple’s servers. And you can see the transcription appear as you speak, in real-time. In fact, the cursor remains active too; if you see a mistake, you can click around (without speaking) to make your edits, put the cursor back where it needs to be, and start talking again. Unfortunately, however, Mavericks doesn’t of …

Source: Mac OSX Hints