I use dictation increasingly on iOS and also on Mac desktop — where I have encountered an unexpected behaviour. I can use a wired mic into the MacBook headphone socket and it works fine.
My preferred way is to use a bluetooth mic on a headset. It works well with the conventional Apple fn-fn- dictation (which however fades out unpredictably) but the Drafts version of dictation, generally much more reliable, doesn’t appear to recognise a bluetooth mic (I have tried more than one).
I have looked under Apple Preferences and the right permissions are checked.
Is the Bluetooth mic configured as your default system input mic?
What mic is it you are using?
Drafts uses system APIs to determine which mic to use, which allow use of BT mics, but leaves it up to the OS to determine what the best available option is.
I’ve experienced this as well.
AirPods. Set to default.
The bluetooth mic (Openear) is set as default.
It works fine when I use the keystroke fn-fn.
It doesn’t register when I attempt to use the Drafts microphone option.
For obvious reasons I would much prefer to dictate via Drafts rather than suffer the limitation of the Mac OS approach which cuts out unpredictably.
I powered up my Parrot Bluetooth headset and was able to dictate directly into Drafts for at least a paragraph. I did have to click the button on the headset to get it to start. It stopped as soon as I hit a keyboard key, which makes sense.