An Acronym for TeleType.
A console; a device that looks like a typewriter. In abstract terms, something with a standard input (stdin(3)), standard output (stdout(3)), and a standard error (stderr(3)). AddToMe: this is not very accurate; whoever knows better please correct this. There are many different standards for TTYs defining keymaps and capabilities and the control sequences these generate and are accessed by, respectively. VT100? is the most widely followed such standard.
In Unix-alike systems, an instance of getty(8) is given initial control of an actual TTY. Its purpose harkens back to the days of serial connections; getty(8) is responsible for setting things up so the terminal and the computer can talk to each other. It then displays the familiar login prompt, waiting for a user to identify himself, and passes control on to login(1). On Linux systems, some variant of getty(8) (often agetty(8)?) is launched for every virtual console configured).