Illuminated letters are letters that are decorated. During the middle ages, monks would copy books by hand since the printing press hadn't been invented yet. Back then, books were very valuable as they were hand-copied. These monks would illustrate the first letter of the first word on a page or at the start of a paragraph. They are beautiful! Some of the best examples of illuminated letters are in the 'Book of Kell' which you can view online as well as find in any decent bookstore. Libraries almost always have a copy, too!
Illuminated letters may have vines drawn around the letter's parts or a letter may be made to look like something else. Some of these letters had miniature pictures of angels, peasants working in the fields, gargoyles - all sorts of things! They are often gilded with gold ink.