Debugging on hardware is “printf” style debugging only I’m afraid. You need an FTDI cable, there are detail on the libavr32 page.
If you’re more interested in the programming language side of the Teletype, then the best way to get a handle on it is to start by concentrating on the simulator, that can run on your computer and you can use gdb if needed too.
Essentially the Teletype language side of the codebase lives in the src directory, module contains the code specific to the hardware.
Start with main in simulator/tt.c:
You can see that it sets up a global scene_state_t, then for each command it creates an exec_state_t and then runs the parsed command in it. Don’t worry if that takes a while to comprehend.
Once you’re happy with that, I’d suggest studying src/teletype.c, in particular run_script and process_command. Unfortunately these have become more complex over time as features have been added and bugs have been fixed.
The usual ‘my first Teletype patch’ is to add an OP, either a toy one, or perhaps something particular to your own requirements (it’s fairly easy to maintain your own branch of the Teletype firmware with custom OPs if you’re proficient with git).
If you have something specific you’re trying to achieve let us know and we can point you in the right direction.