If you want to type quickly, especially for something real-time like dictation, it's better to keep going and fix typos later. You don't want to train people to stop typing every time they mess up, because they might miss something.
I agree for skilled typists, but if you were just trying to learn the keys at first I could see wrangling backspace being more distraction than learning.
I disagree. In real word processors the cursor would move forward and people should get used to that, instead of having to learn one thing here and something else in the rest of the world.
I dunno, do you remember first learning to touch type? For all we talk about typing in keystrokes at a time, that's an exercise in frustration if you don't confidently know where each key is. 99.9% of your typing will be "real world" practice, but there's also utility in isolated drills.
Anyway, as someone who's tried to learn to type on prototype hardware without a working backspace, I appreciate the feature :)
And, it should move the cursor without moving the text.