How does the in-game voice chat work?

I'm still kinda new to the game (still haven't even got my first 80), but I've played for the past couple months and noticed they have the new voice feature. But I've never heard anyone speaking.

I know people do use Ventrilo, and eventually TeamSpeak, but what about the in-game voice chat? How does it work? Does it work? Why people don't use it? I'd love being able to chat on Random Dungeons or even hear everyone screaming in Battle Grounds, like you can already do in Counter Strike for a long time already.

My wife and I do tank/heal while leveling our alts, and I have a macro that says people are welcome to join us in there. I've only had one person do it, but it's still an option. Beats typing it every time.

If you don't tell them they are there, they won't know you're there! :-)

It does work, but as you've made mention, most people that work in organized teams (guilds, Arena teams, pick up groups/raids) end up using a Ventrillo or Teamspeak server that someone has access to.

Functionality-wise, it's no different than using a voicechat server. You'll set up a push-to-talk key and utilize that for whenever you want to voice something. I'm not sure if there's an "always on" option, or a voice detection option to auto-broadcast when a decibel threshold is hit, but I don't believe so. Edit It does have auto-detection/always-on as well, thank you for the correction.

Generally speaking, the in game voice chat is very low quality compared to what you'd get on a Vent/TS server. Additionally, it's exactly the reasons you mentioned above that people tend to not use it. You can prevent certain group situations from coming through via voicechat (e.g. specify that you only want to hear it in groups, not in battlegrounds or raids), but it's still subject to the same abuse that an admin-less voicechat server would face, which causes people to inherently distrust it.

edit: And as Raven Dreamer has mentioned in his comment to your initial post, the majority of guilds are already set in their ways of using 3rd party software to do the same thing. There was little need / desire to change, especially at the relatively low cost per month of having a much higher quality and customizable option for your guild/friends.

Aside from Ventrilo and TeamSpeak, a lot of people are also switching to Skype.