Apparently it's rsh, not telnet. The telnet manual does mention it though, since you can put telnet in a rsh-like mode where ~ does work. (May depend on telnet version.)
man 1 telnet on FreeBSD or OpenBSD contains:
"When in rlogin mode, a line of the form ~. disconnects from the remote
host; ~ is the telnet escape character. Similarly, the line ~^Z suspends
the telnet session. The line ~^] escapes to the normal telnet escape
prompt."
although on the Debian man page, it appears slightly differently as:
"-r Emulate rlogin(1). In this mode, the default escape character is a tilde. Also, the interpretation of the escape character is changed: an escape character followed by a dot
causes telnet to disconnect from the remote host. A ^Z instead of a dot suspends telnet, and a ^] (the default telnet escape character) generates a normal telnet prompt. These
codes are accepted only at the beginning of a line.
"
telnet is not installed by default on CentOS, but has the same man page as on Debian.