Microsoft execs describe Office Dictate as "one of the Office Intelligent Services, bringing the power of the cloud to Office apps." Other "Office Intelligent Services" include PowerPoint Designer and Editor; the Smart Lookup pane, Excel Insights, and Office Tell Me.
I'm not sure if Microsoft is using the Dictate technology developed by its Microsoft Garage incubator as the basis for the Office Dictate feature. Dictate originally was an add-in for Word, Outlook, and PowerPoint and used the same speech-recognition technology in Cortana for converting speech to text, coupled with real-time translation. I've asked the company if this is the case but haven't heard back yet.
Update: A member of the original Garage Dictate project confirmed that this Office Dictate technology being built into the Office apps is based on the Garage project's work. From Deep Learning Data Scientist Anirudh Koul's tweet to me today:
"This is the natural evolution, from an experimental @MSFTGarage add-on we built at a hackathon, to now having the same goodness baked-in Microsoft Office without having to install anything."
I've had a few people ask what is going to happen to the dictation technology that's built into Windows, especially when it's applied to Office apps. Still waiting for more on that.