I made a few tweaks (1. No need for @w{} macro when variable does not have an underscore, 2. use of two spaces after period when documentation is viewed in text format, 3. Added sentence about GNUTERM being set in the shell before starting Octave or during the session with setenv.)  I checked the change in under your name on the stable branch since this was just a documentation fix.

@Mike: If you get a chance, could you review the patch I submitted for bug #56505?

The GNUTERM environment variable is technically a part of Gnuplot, and it's documented elsewhere. But it should probably be mentioned as a way to influence the terminal selected by Octave when using the "gnuplot" graphics_toolkit. I suggest a short paragraph and example in the "Customizing Toolkit Behavior" subsubsection. I'll try to take a few minutes and write something and attach it here for review.