Dictation on iPhone

I just upgraded to a 6+ from a 4S. When driving I use dictation for texts and email. The new phone now says that "Dictation sends information like your voice input, contacts, and location to Apple to process your requests." Reading their Dictation/Privacy details, it states "[T]he things you dictate will be recorded and sent to Apple to convert what you say into text. Your device will also send Apple other information, such as your first name and nickname; the names, nicknames, and relationship with you (e.g., "my dad") of your address book contacts; and song names in your collection (collectively, your "User Data"). All of this data is used to help the dictation feature understand you better and recognize what you say. It is not linked to other data that Apple may have from your use of other Apple services."

Why? I thought the voice-to-text software was built into the phone. Why now does Apple need to process dictation remotely and why do they need my contacts and other data? This makes no sense.

Thanks in advance.