Windows Terminal serves as a unified shell for various command-line tools, including PowerShell, Command Prompt, and WSL. Users can enhance their experience by customizing settings, which improves readability and consistency across devices. To back up Windows Terminal settings, users can export configurations to a JSON file by accessing the Settings option, opening the JSON file, saving it as backup-settings.json, and selecting a save location. To restore settings, users must locate the backup file, edit it in Notepad, copy the content, and replace the existing configuration in Windows Terminal before saving the changes. Additionally, users can set a different default shell in Windows Terminal.