@mavidaru, there are two separate issues being discussed in this thread:
- The internal microphone being disabled when the laptop is closed. I think that this is what you were referring to when you were saying that it is "a hardware restriction so no software change is going to change the behavior". I agree with you on this, and I also don't think it is a particular problem.
- Dictation not working with an external microphone if the laptop is closed. This, really, is a bug. It seems to happen after the laptop wakes up from having gone to sleep while the lid was closed. When that happens, it should be noted that dictation still works in Drafts or through VoiceOver. In my experience, when this happens, it can only be solved by a reboot. As a result, I am rebooting my MacBook Pro significantly more often than I would like it to!