It's part of Vista - Speech Recognition. You can to tell it to do just about anything you can do with a mouse, including drag an icon across the screen. In one example, if you're on a web page you can tell it to "show numbers" and it will put a number on top of each link or window tab. Then you tell it the number of the item you want to click on and off you go. Or if you're on the desktop, you can tell it "start".. "all programs" or just tell it the program you want to run - "open notepad" for example..
It got quite a bit of bad press during a Microsoft presentation glitch but it was still in its early stages at that point. Infact I'm pretty blown away at how well it performs since they fixed it.
Conclusion: It's pretty fast for dictating paragraphs of text but not practical unless you're a slow typer or an amputee..