This was Sept 2014; saw quite a few people with dogs carrying their own packs (food). On one hot day, a dog jumped into a creek to cool off. I imagine her food got all soaked. I don't know where the dogs stay during the night.
If I am correct this is just west of the Alto after Castrojeriz - you can see the water stop / at Fuente del Piojo at the top. It was a lot greener and wetter back in May. As for the dogs - well I will assume that they "locals" who are use to walking 15-25 km per day (and sleeping outside?)