(newbie) ATmega2560 won't stop at breakpoint

Indeed. You’re setting

So pressing will launch the simavr program for simulating AVRs. It will not touch your running board.

If you want to debug the real board via the existing serial connection, have a look at the debug_tool = avr-stub option described in Atmel AVR dev/platform v3.0.0: updated Arduino cores, support for AVR GDB stub and the related docs. (This needs extra libraries and code additions in the firmware to work!)

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