Recs.
Updated
iTerm2 is a replacement for Terminal and the successor to iTerm. It works on the recent versions of macOS. Its focus is on performance, internationalization, and supporting innovative features that make your life better, while maintaining a lot of options and settings to customize the terminal.
SpecsUpdate
Pros
Pro Can immediately open files inside a text editor
You can Ctrl+Click on a file path to open said file in a text editor.

Pro Works perfect with Oh My Zsh
It's a perfect base to add Oh My Zsh on top of it and enjoy a lot of themes and a really pleasant look and feel.
Pro Works well with tmux
The great mouse and clipboard support that are built-in go really well with tmux.
Pro Any key can be mapped to any function
Using the Preferences Menu you can set up hotkeys to map virtually any action you can think of to a single key or a combination of them. This is extremely helpful as it allows you to use shortcuts to edit commands you are typing in the terminal and while most terminal emulators have shortcuts for this sort of thing, few of them let you define your own.
Cons
Con Keycodes are not passed through following Linux standards
If you come from a Linux terminal emulator (Gnome Terminal, Konsole...) and you rely on key-combos that are widely supported in those, porting the same functionality to iTerm is possible but will require a lot of research and configuration on your part, so account for a long painful adoption period.
Con Not quite as fast as Alacritty or Kitty
Comparing these 3 terminals on the same machine/config, iTerm stands out as the slowest of the bunch. The difference may not be noticeable to all users.
Con Doesn't support Snow Leopard 10.6.8
Some people still use Snow Leopard or other 32-bit systems.
Recommendations
Comments
Flagged Pros + Cons
Con Sometimes updates break basic functionality
A release a few months back didn't respect the system umask which left people scratching their heads when things quit working. Terminal.app may not have as many bells and whistles, but that is a good thing.
Out of Date Pros + Cons
Con Lack of support for ligatures
Now some monospace typefaces (such as Hasklig and Fira Code) have support for ligatures, but it's not supported by iTerm2.
