They can be either. In my case we had both handwritten and typed letters from friends and family. We did have all of ours signed by hand, though, just to be on the safe side.
As to what’s included, they don’t have to be long and sappy or anything like that. Ours mostly included how and when they met my husband (the applicant) in person and information on what they observed, what they thought of my husband and of us as a couple, and what they knew of our relationship. It was all factual based and not lovey dovey filler.
Mostly what they’re looking for is that the information your letters give for things like timing and whatnot is all cohesive and doesn’t contradict the info you’ve provided. So in our case the info provided by our friends and family lined up with not only the information we provided in our application but also with all the other letters, as it rightfully should if the information is truthful and correct.