The full path of this mode in the Group Policy Management Console on Server 2003/2003R2:
"Computer Configuration\Policies\Administrative Templates\Windows Components\Terminal Services\Terminal Server\Printer Redirection"
and Server 2008/2008R2/2012/2012R2/2016:
"Computer Configuration\Policies\Administrative Templates\Windows Components\Remote Desktop Services\Remote Desktop Session Host\Printer Redirection"
This policy setting allows you to specify whether the client default printer is automatically set as the default printer in a Terminal Services session.By default, Terminal Services automatically designates the client default printer as the default printer in a Terminal Services session. You can use this policy setting to override this behavior.
The policy has 3 options.
Enabled->The default printer is the printer specified on the remote computer.
Disabled->The terminal server automatically maps the client default printer and sets it as the default printer upon connection.
Not Configured->The default printer is not specified at the Group Policy level. However, an administrator can configure the default printer for client sessions by using the Terminal Services Configuration tool.