Partial Truth:
The only dictionary available is the built in
New Oxford American Dictionary.
Truth:
Unlike some other reading devices, the Kindle can have only one primary dictionary at a time. However, any suitable dictionary from the Kindle store or DRM-free MOBI dictionary can be used as the primary. Until recently there were no suitable dictionaries in the Kindle store, but now
Merriam-Webster's Collegiate Dictionary, 11th Edition is available and there may be others.
The Kindle supports only the simplest kind of MOBI dictionary, and most of the many dictionaries available for sale in MOBI format are not suitable for the Kindle. The following DRM-free MOBI dictionaries do work on the Kindle:
GNU Collaborative International Dictionary of English, and
Wordnet Dictionary for Mobipocket. It is also possible to build your own MOBI dictionary, see
How to create your own mobipocket dictionary for any language:. For example, the Encarta dictionary works on the Kindle but its license requires you to convert it to MOBI yourself, see
Converting Encarta Dictionaries to Mobipocket Tutorial.
Dictionaries are large, so on a Kindle 1 it is a good idea to put them on your SD card.