1)the ability to recognise sound waves and to interpret them to written text.
2) By means of trainging the software to your voice, you will then be capable of dictiacting letters,ect. By recogisining the indivual sound you produce when you say the word "Hello" and translating that to written text.
3) People with disabilities and who are unable to use standard input options would receive extended use from voice dictation.
4) Good qaulity hardware is a must for ease of use. I have seen dragon natrally speaking demonstrated at a show and it sucked. But thier microphone was broken and the second time they did it with a good mic it worked really well.