Translation:This is my letter.
Because the sentence is written to emphasise "this". (Ini) (suratku)
If you wanted "This letter is mine" and emphasise "This letter" you'd say (Surat ini) (punyaku)
Grammatically, you can use it after practically any noun or verb where you could otherwise use "saya" or "aku" You can also use it in front of /some/ verbs, but it's easy to get that wrong.
You can't use it on it's own eg. at the start of a sentence.
Keep in mind that it's much more casual than "saya" so don't use it in formal situations.