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I have bound "C-;" to 'other-window in my config like so.

(global-set-key (kbd "C-;") 'other-window)

When I run emacs outside of a terminal, this keybinding works as I would expect. Inside Iterm2 and OS X terminal, however, emacs does not appear to distinguish it from ";". I can use the keybinding itself, however, by activating god-mode. I'm wondering if this is some limitation/"feature" of terminal emulators in general.

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I'm wondering if this is some limitation/"feature" of terminal emulators in general.

Correct.

Your terminal emulator does not send those sequences to Emacs because it is faithfully emulating something which was not capable of sending such sequences.

Emacs is accurately reflecting the sequence that it actually received.

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