The answer is an envelope. It contains a letter.
The word is "envelope" (which usually holds only one letter).
The word its is a possessive form of the pronoun 'it', used as an attributive adjective.It is less awkward than saying 'Put the letter in the letter's envelope' or '... the envelope of the letter'.
A formal or causal letter is usually mailed in an envelope.
An 8 letter word, with just one letter in it, is ENVELOPE. 8 letters in the word, 1 letter inside the envelope.
Envelope
place something in an envelope together with a letter
A business letter sized envelope, the most popular being envelope style #10 measures 4.125 inches x 9.5 inches.
Envelope is the answer.
envelope
letter
Letter.