Problem

It's not clear what defaults are used when the "use default" checkbox for input encodings or output encodings is selected within a remote host or under Server Settings | General.

Resolution

When used in a remote host, the "use default" checkbox makes the remote host fall back to the settings in Server Settings | General. If Server Settings | General is set to "use default" this is equivalent to "NONE" being selected because there is nowhere for it to fall back to. This means that if both settings are at "use default" then no compression is effectively enabled.

The settings under Server Settings | General will apply to all connections that do not use a remote host as well as all remote hosts configured to "use default" whereas the remote host will apply only to connections with the host and port listed in the remote host. One of the two levels must be set explicitly to gzip, deflate or both to enable compression.