You could see what you were typing because it appeared on the paper in front of you. A teletype is just an electric typewriter at heart.
There was no screen, the picture is just as the system was.
The teletype was the console input to the computer. Once logged in, you had the standard command prompt. You entered your command which was sent to the mainframe character by character as you typed it. Then the response was presented on the paper. This was replaced by the console, or shell, display on a video monitor when such things came along later.
As shown in your picture, there was a punched tape reader / writer on the left hand side, so you could also "type" onto punched tape, or read the contents of tape into the computer or onto the roll of paper.
I spent my formative years programming on these. They were very slow to use because the keys had to be depressed a long way before contact was made and the keystroke detected. This made it impossible to touch-type at any sort of respectable speed. They were also incredibly noisy. The sound of the clattering carriages in a room full of a couple of dozen of these could be deafening.