And yes it was actually used in combat. Has any one ever heard of the Wutang clan? These were the basic warlords of China. They had four systems, one of which is no longer in circulation.
It's phonetically pronounced Wu Dang, and it was an order of Taoist (or Daoist) monks, not a "clan."
They weren't warlords, the Wu Dang was one of the most renowned and well-respected Daoist orders in China, for many centuries. There was somewhat of a rivalry between Shaolin and Wu Dang, i.e. the on-going rivalry in China between Daoism and Buddhism. Shaolin was naturally the strongest of the Buddhist establishments, and Wu Dang the strongest of the Daoist.
Tai Chi is mostly practiced today in China not as a fighting style, but as an exercise for, well, older folks. If you've ever been to a Chinese park early in the morning, you know what I'm talking about. It helps people age better, believe some. My grandparents practice it, my grandfather is quite good.
However, it did start as a comabt technique... it emphasized smooth, fluid motions, a corrollary of the Ying Yang doctrine, using "soft" against "hard." I haven't met a serious Tai Chi master who has mastered the art to the point of being able to use it in combat effectively. It is a very complex technique.