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I did not change it, actually.
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Which device are you using?
The setting is under:
Assignments->Device, Device and Pin Options button, Unused Pins
(which can be a tab or selection menu depending on Quartus version).
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Does this mean that they are basically an output set to low?
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Yep.
Its a stupid default, which has been changed to a sane value for newer devices.
This is why I always define a top-level entity with every signal pin defined. Then the unused pins really are unused and the unused pin setting is of no consequence.
Cheers,
Dave