"Hey, Charlie, I always meant to ask how you got that scar on your wrist."
"Funny you should ask, Felix. Back in 1962, I was a victim of a horrendous crime. It was a Thursday, the moon was peeping out from behind a polar bear-shaped cloud. The cold wind pierced through the thin tunic I wore as I rushed across Madson Bridge to get to my fiance's birthday party..."
We can all imagine this type of thing. Usually these long passages sound like anything but natural speech. The voice is the narrator's voice rather than a character's voice. The details usually have nothing to do with what the character would think about when revealing such information.
If we think about why a writer would choose to do such a thing, it's probably because she or he felt the need to get back story out, but didn't want to use the elementary device of going into flashback. Revealing back story through speech seemed like a more clever way of solving a particular problem.
But, what happens from a reader's point of view, in my opinion, is that we get pulled out of the story precisely because we've decided the writer is trying to be too clever. They're behaving like a bad magician who can't quite make us believe that the dove really flew out of a sleeve. We groan. Why did they even bother?
I think readers prefer a good carpenter over a bad magician. Instead of trying to be too clever in an attempt to impress the reader, consider telling the story as plainly and as simply as you can. Let the reader understand the structure, the scaffolding that you are using to build the story. If you need to get some history in there, for instance, you could use a simple transition sentence and then tell the information as you need to:
Charlie had a scar on his wrist because he had been a victim of a crime back in 1962. He had been rushing across Madson Bridge, trying to get to his fiance's birthday party when...
It may appear that you're writing childishly, but many times a reader will appreciate the simple solution. Just lay the story out for the reader to experience. Be sincere. Let the characters and the situation impress the reader, rather than the technique.
Of course, there is such a thing as a good magician. Some writers are excited by the chance to impress their readers by using clever tricks. If you can think of an unusual or ultra-interesting way of using a speech to reveal back story, then go for it!
Note: I just wanted to say that Tara Maya has an excellent post today on character-driven writing. Check it out!