When a writer chooses a word and writes it in such a way that the letters form a pictures of the word's meaning what poetry is that?

Not quite what you say but on similar lines you may be referring to 'concrete poetry', 'shape poetry', 'visual poetry' or 'vis-po'. These shape poems are often used to grab the readers attention as well as being enjoyable to read and perform.

---- A poem where the poet arranges the Words or letters of the poem into a shape is called a Calligramme.

There are various other ways to spell Calligramme, but the form was popularised by the French poet Guillaume Appolinaire around the time of World War I. (Apollinaire died in the Spanish Flu epidemic which followed the war).

Apollinaire invented the term Calligramme ['Beautiful Writing' in Greek], he also invented the Word Surrealist.

But Calligrammes exist from much earlier. George Herbert's 'Easter Wings' is a Calligramme, and early Christian mirrors have been found with the inscription NIPSON ANOMEMATA ME MONAN OPSIN arranged in a 'mirror' shape around them.

[WASH CLEAN MY SINS NOT MY FACE ONLY]