4.12.2 ‘Allow terminal to use xterm 256-colour mode’

This option is enabled by default. If it is disabled, PuTTY will ignore any control sequences sent by the server which use the extended 256-colour mode supported by recent versions of xterm.

If you have an application which is supposed to use 256-colour mode and it isn't working, you may find you need to tell your server that your terminal supports 256 colours. On Unix, you do this by ensuring that the setting of TERM describes a 256-colour-capable terminal. You can check this using a command such as infocmp:

$ infocmp | grep colors
        colors#256, cols#80, it#8, lines#24, pairs#256,

If you do not see ‘colors#256’ in the output, you may need to change your terminal setting. On modern Linux machines, you could try ‘xterm-256color’.