A cover letter is the written part of an Upwork proposal, the message a freelancer or agency addresses to the client explaining how they would approach the job and why they are the right fit for it.
The letter is the only part of a proposal written for one client. The bid is a number and the profile is the same on every proposal, so the letter is where a freelancer shows that they read the job post and understood the problem. Clients see the first line or two of it in their proposal list before opening anything, which is why most advice about cover letters concerns the opening sentence. Attachments can be added, and Upwork's own assistant can draft a letter from the job post and the profile, which has made generic letters more common rather than less.
Length is not a virtue. A client with forty proposals reads for a sentence that proves relevance, a question that shows thought, and a reason to click the profile, and skips anything that restates the profile overview. Where the client has set screening questions, the answers are shown with the letter and often carry more weight, because they are harder to template.
A cover letter is not a contract document and nothing in it binds either side; the terms that matter are set in the offer. Upwork's Terms of Service do apply to it: contact details that invite the client off the platform count as circumvention and can lead to an account hold.
How Upwork Insights uses it
This term describes Upwork's own rules or product rather than a figure the index measures; the pages that do carry live figures are the stats and rate pages.