Android Police confirmed that this captioning functionality is for sent video and voicemail on Duo, and is a separate feature to Live Caption, the Google feature on Pixel phones (and some other Android devices) that captions live audio on the screen.

Google is touting the feature as being handy in a noisy place for you to still be able to read the captioning from a video or audio message in Duo, but it is of course also a great accessibility feature.