That's not brace expansion, that's a standard parameter expansion operator (dates back to the Bourne shell in the 70s).
${1-$PWD}
Expands to the value of $1 (the first positional parameter) if it is set (if $# is strictly greater than 0) even to the empty string, or to the content of the $PWD variable otherwise.
Run:
info zsh 'Parameter Expansion'
for details.
typeset is not Bourne nor POSIX, but it's not zsh-specific either. It comes from the Korn shell (from the early 80s) and is used to limit the scope of a variable to the current function. It's also found in bash and yash.
Run:
info zsh typeset
for details.