I know wanikani says it means letter, does that mean like letter of the alphabet or like a letter you write to someone?
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Like a letter of an alphabet
手紙, which you will learn later, is for the sort of letters your write to someone.
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This is why the full item name is “Letter (Of The Alphabet)”.
文字 also covers written characters in general, not just the Latin alphabet, so it also works for talking about kana, kanji, Greek letters, etc etc.
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It even covers 絵文字 ！
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The question is already answered, but just for the sake of completion:
There is a context section for every vocabulary item with sentences and common word combinations (https://www.wanikani.com/vocabulary/文字#context). Furthermore you can search the vocabulary in a dictionary (https://jisho.org/word/文字) for additional definitions.
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And people old enough may know about the phenomenon called 文字化け that plagged the sharing of computerized text files before a common 文字コード had been established.
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