Hello northern girl,
Here are a few ramblings on the topic:
It sounds as if the book is suggesting that you set students the task of learning words and letters for homework. You then start the following lesson with a dictation of those words and letters to ascertain how much they have learnt.
This is certainly one method of learning and checking learning. It’s not the most exciting though! I suggest you do it occasionally and see how the students respond. If you think they are learning with this method, continue. If they’re not learning, then you can abandon it. It’s not necessary or desirable for a teacher to follow every activity in a course book. You need to adapt and omit exercises that are not suitable to your teaching situation.
Dictation checks whether a student recognises the sound of a word and checks whether they can spell it correctly. These are important aspects but do remember that learning a word means more than just that. Really knowing a word involves being able to use it in a correct sentence, both in its oral form and written form.
I don’t know what age or level your students are (you don’t mention that in your question); learning isolated words can work with some age groups (but remember what I said above about this not being enough). Some countries and cultures expect a certain amount of rote learning which is essentially what this activity is. By doing this activity, you will fulfil their expectations of learning which is always a good thing as they feel comfortable with it.
Dictation can be made fun or more communicative: students can dictate to each other in pairs. The teacher can read out a sentence at high speed, the first time students will understand only a few sounds; as the teacher repeats the sentence, students will catch more and more of the sentence. This activity will help them to recognise the sounds of connected speech: the schwa, connected letters and omitted letters.
I guess it’s all about achieving balance in the lesson and doing what helps your students learn.