This character is a Other Letter and is mainly used in the Arabic script.
The glyph is not a composition. It has no designated width in East Asian texts. In bidirectional text it is written as Arabic letter from right to left. When changing direction it is not mirrored. The word that U+066E forms with similar adjacent characters prevents a line break inside it. The glyph can be confused with one other glyph.
The Wikipedia has the following information about this codepoint:
The Arabic script has numerous diacritics, which include consonant pointing known as iʻjām (إِعْجَام), and supplementary diacritics known as tashkīl (تَشْكِيل). The latter include the vowel marks termed ḥarakāt (حَرَكَات; sg. حَرَكَة, ḥarakah).
The Arabic script is a modified abjad, where short consonants and long vowels are represented by letters but short vowels and consonant length are not generally indicated in writing. Tashkīl is optional to represent missing vowels and consonant length. Modern Arabic is always written with the i‘jām—consonant pointing, but only religious texts, children's books and works for learners are written with the full tashkīl—vowel guides and consonant length. It is however not uncommon for authors to add diacritics to a word or letter when the grammatical case or the meaning is deemed otherwise ambiguous. In addition, classical works and historic documents rendered to the general public are often rendered with the full tashkīl, to compensate for the gap in understanding resulting from stylistic changes over the centuries.