Many remote systems detect terminal capabilities using the TERM value provided by the SSH client, and mismatched values commonly cause broken colors, incorrect line drawing, or unusable full-screen apps such as vim, tmux, and text-based installers.
When PuTTY opens an interactive SSH session with a pseudo-terminal, it sends a terminal type string to the server. The server uses that value to set TERM, and applications use the terminfo database to decide which control sequences and features (colors, cursor movement, alternate screen) are safe to use.
Changing the terminal type string only changes what the remote host assumes about the terminal emulator, and it does not modify authentication or encryption. A value such as xterm-256color works well only when the remote host has a matching terminfo entry, and the new value only takes effect after reconnecting because the string is negotiated at session start.
Selecting Default Settings and saving updates the default for new sessions.
Use xterm-256color for 256-color support, and use xterm as a compatibility fallback if the remote host lacks matching terminfo.
Existing sessions keep the old TERM value until a new connection is opened.
$ echo "$TERM" xterm-256color
If full-screen apps report an unknown terminal type, verify remote support with infocmp xterm-256color and switch to xterm if needed.