top shows it's output on a terminal device, not on any standard stream (e.g. STDOUT/STDERR). As there is no terminal involved in the remote host when doing:

ssh user@host top

it's giving the error about the TERM environment variable not being set.

You need to allocate a pseudo TTY on the remote host using the -t option of ssh:

ssh -t user@host 'top'

Now you can send keys to top in the usual manner too e.g. q to quit, h for help etc.

This same solution goes for all programs that require a TTY to show output.

For the sake of completeness, you can allocate a pseudo TTY even if there is not local TTY involved, by using multiple -ts e.g.:

ssh -tt user@host 'top'