To provide a more streamlined experience without the need of popping up extra message windows and dialogs anymore, Outlook 2013 introduces in-line reply which allows you to press reply and directly start writing your reply in the Reading Pane (which means that it is not really a Reading Pane anymore and they should have changed the name).

You can press POP OUT to open your message in a regular Message editor window which provides access to additional formatting options and features.

To always use the regular Message editor window instead of in-line reply, enable the option; File-> Options-> Mail-> Replies and Forwards-> Open replies and forwards in a new window.

Replies in new window