I have a Huawei watch, it has a speaker and mic also. To play music, I first have to cache the music locally on my phone (using the Google Play Music app), then I can sync it to the watch. Once I've done that I can play the music on my watch. If you're not using Google Play Music, you will need an app that has Android Wear compatibility.
As for replying to messages - I assume you mean texts? I use Hangouts, if I swipe left on the card for the message I have a reply button, I can then speak my reply and it sends it. Again, your app of choice for that function needs to have a Wear "app" to go with it.