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The reason you don't see that locale in the output of systemd's localctl is that by default it only lists locales whose name ends in .UTF-8 or contain .UTF-8@ (whether or not they use UTF-8 as charmap, but it would be misleading to name a locale with .UTF-8 if it didn't).

Use locale -a or SYSTEMD_LIST_NON_UTF8_LOCALES=1 localectl list-locales to list all locales regardless of their name.

In any case, the value of $TERM is not relevant, it's set by terminal emulators to tell applications what kind of emulation the terminal implements. xterm-256color would mean your terminal emulator claims to implement an emulation compatible with that of xterm when supporting 256 colours. It doesn't say anything about character encoding. The ssh client will pass $TERM to the server when in interactive mode (like when in rlogin mode when not specifying a remote command to run or with -t), and the ssh server will propagate it to the remote shell or command then regardless of AcceptEnv.

The reason you don't see that locale in the output of systemd's localctl is that since that commit, by default it only lists locales whose name ends in .UTF-8 or contain .UTF-8@ (whether or not they use UTF-8 as charmap, but it would be misleading to name a locale with .UTF-8 if it didn't).

Use locale -a or SYSTEMD_LIST_NON_UTF8_LOCALES=1 localectl list-locales¹ to list all locales regardless of their name.

In any case, the value of $TERM is not relevant, it's set by terminal emulators to tell applications what kind of emulation the terminal implements. xterm-256color would mean your terminal emulator claims to implement an emulation compatible with that of xterm when supporting 256 colours. It doesn't say anything about character encoding. The ssh client will pass $TERM to the server when in interactive mode (like when in rlogin mode when not specifying a remote command to run or with -t), and the ssh server will propagate it to the remote shell or command then regardless of AcceptEnv.

^{¹ with that SYSTEMD_LIST_NON_UTF8_LOCALES environment variable only documented in doc/ENVIRONMENT.md in the code on Debian-based systems included in /usr/share/doc/systemd/ENVIRONMENT.md.gz}

If locale -k charmap reports ISO-8859-15 on the remote system, that means either the LC_ALL environment variable or LC_CTYPE if LC_ALL not set or LANG if both are unset, is set to a locale that uses ISO-8859-15 as charmap. Using locale without argument will give a summary of the locale settings.

If locale -k charmap reports ISO-8859-15 on the remote system, that means either the LC_ALL environment variable or LC_CTYPE if LC_ALL is not set or LANG if both are unset, is set to a locale that uses ISO-8859-15 as charmap. Using locale without argument will give a summary of the locale settings.

In any case, the value of $TERM is not relevant, it's set by terminal emulators to tell applications what kind of emulation the terminal implements. xterm-256color would mean your terminal emulator claims to implement an emulation compatible with that of xterm when supporting 256 colours. It doesn't say anything about character encoding. The ssh client will pass $TERM to the server when in interactive mode (like when in rlogin mode when not specifying a remote command to run or with -t), and the ssh server will propagate it to the remote shell or command then regardless of AcceptEnv.