So... what the heck is the Native American flute, anyway?  I'd say it's pure magic, but that's not exactly the scientific definition you might be looking for, so let me share with you what I've learned about this wonderful stick of wood.

According to R. Carlos Nakai & James Demars "like the recorder, the Native American flute is an end-blown vertically held block flute, belonging to the family of instruments called flute-a-bec, that uses a movable flue, diaphragm and a chimneyed air-directing apparatus to produce sound."
The Art of the Native American Flute. 1st Edition. Phoenix, AZ: Canyon records Publishing, 1996

Basically, this means that you blow into the end (not across the top as in transverse or concert flutes) to create the sound.  Air is forced through the chimney, and hits the fetish (the animal carving at the top), creating a little mini-hurricane and releasing the energy as sound.  That also means that the "sound" comes out of the top of the flute, not the opposite end of the flute.

The flute usually has 5 or 6 holes, is constructed in one key (also like a recorder or an ocarina).  It is almost always constructed in a minor scale (F# minor is the most widely used in traditional Native American music).  The flute does not really hold a sacred spot in Native American history, but instead was was used primarily to woo the ladies!

NAF resources on the web:

INAFA Official Website: http://worldflutes.org
Scott Loomis' Flute Forum: http://www.loomisflute.com
Flute History: http://www.native-american-flutes.com/flute-history.htm
JP Gomez flutes & flute care: http://www.heartsongflutes.com

Major artists worth checking out:

R. Carlos Nakai: http://www.rcarlosnakai.com
Mary Youngblood: http://www.maryyoungblood.com