As a terminal emulator, the application provides text-based access to the operating system, in contrast to the mostly graphical nature of the user experience of OS X, by providing a command line interface to the operating system when used in conjunction with a Unix shell, such as bash.
The preferences dialog for Terminal.app in OS X 10.8 (Mountain Lion) and later offers choices for values of the TERM environment variable. Available options are ansi, dtterm, nsterm, rxvt, vt52, vt100, vt102, xterm, xterm-16color and xterm-256color, which differ from the OS X 10.5 (Leopard) choices by dropping the xterm-color and adding xterm-16color and xterm-256color. These settings do not alter the operation of Terminal, and the xterm settings do not match the behavior of xterm.
Terminal includes several features that specifically access OS X APIs and features. These include the ability to use the standard OS X Help search function to find manual pages and integration with Spotlight. Terminal was used by Apple as a showcase for OS X graphics APIs in early advertising of Mac OS X, offering a range of custom font and coloring options, including transparent backgrounds.