Fixing iTerm2 Gray Overlay on Inactive Panes in macOS

Fixing the Gray Overlay Issue in macOS iTerm2 When Inactive (Defocused)
If your iTerm2 shows a gray overlay when losing focus (split panes or background windows), you can fix it by adjusting or disabling the dimming effect.

Steps:

1. Open iTerm2 Settings (Ctrl + ,).

2. Go to Appearance → Dimming.

3. You can either:

   • Decrease the Dimming amount, or
   • Uncheck Dim inactive split panes (and/or Dim background windows).

This will remove or reduce the gray overlay when iTerm2 is inactive.