This option controls the characters that the four arrow keys (on both the numeric and editing keypad) transmit. In general, you should keep this set to Normal.
Note: This setting is saved as part of the model's default settings, and will be used when initially connecting or resetting a session. Another setting, VT Cursor Key Mode, reflects the current terminal state, which can be changed by the host.
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.