This character is a Other Letter and is mainly used in the Malayalam script.
The glyph is not a composition. It has no designated width in East Asian texts. In bidirectional text it is written from left to right. When changing direction it is not mirrored. The word that U+0D16 forms with similar adjacent characters prevents a line break inside it.
The Wikipedia has the following information about this codepoint:
Malayalam script (Malayāḷa lipi; IPA:[mɐlɐjaːɭɐlibi] / Malayalam: മലയാള ലിപി) is a Brahmic script used commonly to write Malayalam, which is the principal language of Kerala, India, spoken by 45 million people in the world. It is a Dravidian language spoken in the Indian state of Kerala and the union territories of Lakshadweep and Puducherry (Mahé district) by the Malayali people. It is one of the official scripts of the Indian Republic. Malayalam script is also widely used for writing Sanskrit texts in Kerala.
The Malayalam script bears high similarity with Tulu Script and Tigalari script, which was used for writing the Tulu language, spoken in coastal Karnataka (Dakshina Kannada and Udupi districts) and the northernmost Kasargod district of Kerala. Like many other Indic scripts, it is an alphasyllabary (abugida), a writing system that is partially "alphabetic" and partially syllable-based. The modern Malayalam alphabet has 15 vowel letters, 42 consonant letters, and a few other symbols. The Malayalam script is a Vatteluttu alphabet extended with symbols from the Grantha alphabet to represent Indo-Aryan loanwords.
The script is also used to write several minority languages such as Paniya, Betta Kurumba, and Ravula. The Malayalam language itself was historically written in several different scripts.