This option controls the characters that the four arrow keys (on both the numeric and editing keypad) transmit. This setting is normally set by the host and is not saved to the settings file. In general, you should keep this set to Normal.
This setting reflects the current terminal state of VT Cursor Key Mode, which can be changed by the host. The associated default setting, saved with the model, is VT Cursor Key Mode Default.
If the arrow keys aren't working properly, it may mean that this option remained incorrectly set to Application when a host program terminated abnormally. Try changing this setting back to Normal. See VT Terminal Keyboard Configuration for more information.