Dogs do suffer from dementia varying in severity.
My old BC started getting very vacant and barking at nothing at the age of 11, he also looked 'lost'. We lost him at age 15 1/2 and he wasn't too different at the end.
My Malamaute at 13 is very different!! She's like a spring chicken most of the time but we have seen a couple of 'moments' from her too!
There are quite a few medications/remedies (Senioir Aid, Vivatonin etc) that increase the supply of oxygen to the brain for elderly dogs, so it may be worth speaking to your vet.
What sort of dog is she??