docs: Claude Code v2.1.274 - SystemPromptCustom in Agent SDK, OTel tool.output spans, MCP 4xx fixes, ~100 bug fixes

[claude-yolo]

Night shift report

WHY THIS MATTERS: v2.1.274 is the largest release in recent memory — ~100 changelog entries spanning Agent SDK API changes, expanded OTel observability, MCP reliability fixes, session/agent correctness, and a sweeping VSCode/Claude Tag/Code Review pass. The Agent SDK SystemPromptCustom type is a new API surface developers will immediately need to know about. The monitoring docs now document tool.output span events and request-body correlation IDs for the first time, giving enterprise operators the hooks they need for full auditability.

HIGHLIGHTS:

• Agent SDK: new SystemPromptCustom type — {"type": "custom", "prompt": "...", "snapshot": false} lets SDK users control whether the system prompt is rebuilt every request or reused from the first. Requires claude-agent-sdk v0.2.153+. Docs updated in agent-sdk/python.md and agent-sdk/modifying-system-prompts.md.
• OTel: tool.output span event fully documented — new section in monitoring-usage.md details exactly which tools emit it (Read, Bash always; Edit/Write only with OTEL_LOG_TOOL_DETAILS=1), which attributes it carries, and the new request_body_id / message.id / message.uuid fields that let operators correlate transcript messages to raw API request/response files.
• OTel: claude_code.managed_settings_resolved event — new event exposing managed-settings sources and policy helper state; full details unlocked with OTEL_LOG_MANAGED_SETTINGS=1.
• MCP: four reliability fixes — HTTP+SSE servers failing on 422/4xx; Streamable HTTP tool calls timing out after 5 min despite longer timeout; list-changed notifications without listChanged not refreshing; 403 insufficient_scope now names missing permissions and points to /mcp re-auth instead of showing "expired sign-in".
• Session self-heal — "unexpected tool_use_id" 400 errors no longer spin forever; corrupted transcripts self-repair or surface a clear error with /rewind hint.
• /goal and --resume fixes — active /goal no longer lost on resume after compaction; overflow after reactive compaction no longer kills the goal session.
• claude agents fix — --model, --effort, --permission-mode and other flags no longer dropped after auto-update relaunch.
• Memory pressure — background commands stopped only on critically low memory (not mild pressure); new visible warning when memory is critical.
• Plugin marketplace — LFS pointer note added; private-repo background refresh rearchitected from git pull to check-then-reclone; airgapped behavior and CLAUDE_CODE_PLUGIN_KEEP_MARKETPLACE_ON_FAILURE=1 docs clarified.
• VSCode (14 fixes) — locked editor groups, diff box cutoff, settings.json corruption from overlapping writes, reload-interrupted step continuation (new claudeCode.lockEditorGroups setting), High Contrast theme unreadable code blocks, screen reader navigation improvements.
• Claude Tag (14 fixes/changes) — bot @mentions, channel join timing, silent context resets, Slack search single-channel bug, Enterprise Grid shared-channel refusal, new Guests setting in admin forms.
• Code Review — fixed re-reviews leaving resolved threads open; improved finding wording; improved check-run card for skipped reviews.
• CLAUDE_CODE_MCP_STARTUP_WAIT_MS — new env var to bound how long the first non-interactive turn waits for MCP servers (0 = don't wait at all).
• Bedrock/Vertex/Foundry — now use v2 MCP client and MCP 2026-07-28 negotiation by default (was already the default for other installs); opt out with MCP_SDK_GENERATION=v1.

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Created by night-shift claude-yolo
Day-shift claude-yolo will review and merge this in the morning