Settings/General/Incoming Mails, App icon options..., select 'Count of unread messages'.

I closed T-bird to clear the icon. I confirmed the setting to be "Badge app icon with Count of unread messages. I all also deleted all the emails in the list, which were test emails. I sent two more test emails from another device and email account. Correctly, the badge on the app icon then was two, for two unread emails. I then read one of those emails, but the badge number is still two. I then sent a third email, and the badge app icon number is now three. So what the badge app icon is reporting in multiple circumstances is the total number of emails in the inbox list, not the number of unread emails. I wonder if this due to being on POP, which I did specify above. Maybe the badge app icon works right only on IMAP. Just speculating on that. [Also, I am puzzled by the option Count of new messages, how "new" is defined. But what is useful to me is a badge count of unread, which I cannot so far make work.]

does the same occur when using 128 which was released yesterday?

I can't confirm if it's not working on POP accounts, but the option I suggested does work properly here with IMAP accounts.

My Thunderbird version is 115.2.12, which is showing on my screen, after requesting an update, as already up to date, as of the early morning of July 13. Maybe updates are rolled out geographically? On Outlook 2016 client, I see a yellow envelope badge to show that a message (or plural) is unread, but no number of messages is provided. A badge accurately showing whether there are any unread messages is highly useful to me, and for me a must-have really on Thunderbird. I want to walk by my computer and see at a glance from maybe three feet away whether I need to sit down and open an unread email. For my needs anyway, the actual number, which is very hard to read really, is not even needed, but the badge indicating unread emails is needed. I hope someone can respond to the questions about the App icon options which I mentioned in an earlier post in this thread. What more specifically does the "Count of new messages" option do? "New" in what sense? Is there a timer for being "new". Or what? It seems intuitive to me that New=Unread and Old=Read, but that can't be the currently intended definition, since the other option is "Count of unread", so the two options would be identical, if "new" = "unread". The main practical problem in my view is that in Thunderbird POP the badge does not go away after all unread emails are read. This may be because the number count of unread does not go down when each email is read. So the number count cannot terminate at zero unread, which presumably is the trigger for making badge icon go away. So if the number decrementing is too much for POP, that would explain why the badge itself will not go away on POP, even though all emails have been read. This for me and likely some others is a big problem, even keeping me from choosing Thunderbird in a comparison with em-Client. I just want to see from the taskbar whether or not all my emails have been read, a binary type report.

I am now on 128 via Thunderbird.net. The setting is Count of Unread Messages. Despite reading all the messages, the badge number went down to one, but it did not go to zero with no unread messages remaining, and the red circle with a 1 did not disappear either. I sent myself from another device and account a second new email, and the badge number went from one to two. I then opened that email, but the badge number stayed at two. I sent a third email, see the gold star on the new one, and the badge number increases to three. But per above, two of those three have been read. So no change with 128 that I can detect. The badge number in a given session goes up with incoming emails, but not down as they are read. Right now I see one unread and two read, with a three on the badge. I read the unread one, and still see three on the badge. So the badge number seems to be stating the total number of received emails in the current session, i. e. since the app has been launched. Maybe the settings name needs correcting, either that or the software operation. My question also stands: What is the other setting, Count of New Messages? For my money, I am getting a count of new messages, with "New" defined as "arriving in the current session and not remove from the Inbox." There is no Count of Unread Messages option in reality. That would be my take. Whether there are bugs or just misnomers in setting names is beyond me.

As mentioned earlier, I don't see this, and don't know why it's not working for you. All I can suggest is that you first test in troubleshoot mode (under Help), and then test with a new profile and one account (create and manage profiles under Help/Troubleshooting Info, about:profiles).

Thanks for hanging in there. It is working now. I send myself 3 emails, the badge number increases to 3, and now as I delete or move them, the badge number does go to zero and disappears. Perhaps it was something to do with the new launch, since corrected.