The 'c' means it's a character device. tty is a special file representing the 'controlling terminal' for the current process.
Character Devices
Unix supports 'device files', which aren't really files at all, but file-like access points to hardware devices.
A 'character' device is one which is interfaced byte-by-byte (as opposed to buffered IO).
TTY
/dev/tty is a special file, representing the terminal for the current process. So, when you echo 1 > /dev/tty, your message ('1') will appear on your screen. Likewise, when you cat /dev/tty, your subsequent input gets duplicated (until you press Ctrl-C).
/dev/tty doesn't 'contain' anything as such, but you can read from it and write to it (for what it's worth). I can't think of a good use for it, but there are similar files which are very useful for simple IO operations (e.g. /dev/ttyS0 is normally your serial port)
/dev/tty stands for the controlling terminal (if any) for the current
process. To find out which tty's are attached to which processes use
the "ps -a" command at the shell prompt (command line). Look at the
"tty" column. For the shell process you're in, /dev/tty is the
terminal you are now using. Type "tty" at the shell prompt to see what
it is (see manual pg. tty(1)). /dev/tty is something like a link to
the actually terminal device name with some additional features for
C-programmers: see the manual page tty(4).
/dev/tty is a synonym for the controlling terminal (if any) of the current process. As jtl999 says, it's a character special file; that's what the c in the ls -l output means.
man 4 tty or man -s 4 tty should give you more information, or you can read the man page online here.
Incidentally, pwd > /dev/tty doesn't necessarily print to the shell's stdout (though it is the pwd command's standard output). If the shell's standard output has been redirected to something other than the terminal, /dev/tty still refers to the terminal.
You can also read from /dev/tty, which will normally read from the keyboard.