Sometimes, software updates can turn off default features like this. To check if the feature is still on go to watch app> general> enable dictation and make sure it is toggled on. If it is on and still not working, then the next best thing is to restart both devices, this reboots the system. To restart watch, press and hold the side button until a menu appears, then slide the slider that says power off. Then wait and then press and hold the Digital Crown for it to turn back on. On your iPhone, press and hold the volume up and power button until the same menu appears, then slide the slider, and press and hold the power button for it to turn back on. If this does not work, your best option is to wait for a future update like watchOS 27.1 which is a minor update, but will most likely fix these issues. I hope this helps 👍