That's how you gracefully shut down an SSH session, with the socket close initiated from the remote end (where the shell is running.)

\n~. is for gracefully exiting a stuck/hung SSH session (e.g. one where the remote isn't responding to input) without force-killing the SSH client itself (which might do bad things to the process group it lives in.)

Unfortunately not all Telnet servers support that.

Being the least interesting programmer on Hacker News, I don't always write code to handle Telnet-compatible ASCII input, but when I do, I always support ^D.