It is said we can use the operator $$ \pi_\chi=\frac{1}{\phi(N)}\sum_{d\in\mathbb{Z}_N^*}\chi(d)^{-1}\langle d\rangle $$
to project function in $\mathcal{M}_k(\Gamma_1(N))$ into the $\chi-$eigenspace $\mathcal{M}_k(N,\chi)$.
I just down know what the symbol $\langle d\rangle$ means here. Does it mean a cyclic group? If so, how does this operator work?
$\langle d\rangle$ is the Diamond operator. See e.g. these notes of William Stein, or pretty much any other source on modular forms that covers Hecke operators.