.. in filesystem paths represents a given path's parent path.
Without an explicit path preceding the .., the implied path is the current [working] directory, so the .. therefore refers to the current directory's parent directory.
In short: cd with an argument of .. changes to the current directory's parent directory, i.e., the directory one level above in the directory hierarchy.
Shell-specific use of .. with cd:
The legacy command processor, cmd.exe ("Command Prompt") - seemingly with the internal cd command specifically (see Mofi's comments on the question) - considers an . character to implicitly start the cd command's argument.
- Therefore, separating the
cd command from the .. argument with a space character, as usual, isn't necessary; that is, instead of cd .. you can type cd.., which is a shortcut that users of cmd.exe have grown accustomed to over the years.
PowerShell allows . characters to be used in command names, so submitting cd.. does not invoke the cd command (a built-in alias for the Set-Location cmdlet) with argument .. - instead, it looks for a command literally named cd..
To accommodate cmd.exe users who are accustomed to the cd.. shortcut, PowerShell comes with a parameter-less function literally named cd.., so that submitting cd.. as a command in PowerShell effectively works the same as in cmd.exe.
- However, note that only
cd.. works, not also specifying additional components; that is, something like cd..\Foo (which works in cmd.exe) fails.
Get-Command cd.. | Format-List shows information about this function, which reveals that it simply calls Set-Location .., which is PowerShell's equivalent of cmd.exe's cd ..