The commander in chief faced sometimes tough questions at a CNN town hall at Fort Lee in Virginia on Wednesday, with current and past members of the military.
A chaplain in the West Virginia Air National Guard noted "a substantial increase in terror attacks around the world" and in the United States since Obama took office in 2009.
"Sir, my question to you, are we doing anything now greater to combat islamic jihadists?" he asked.
Obama said the number of terrorist incidents has not increased, but there have been some high-profile attacks, "mostly in the Middle East" and in Europe.
The emergence of the Islamic State (ISIS or ISIL) has underscored that fact, he said.
The mother of a 19-year-old killed in Baghdad in 2007 asked Obama, "Why do you still refuse to use the term 'Islamic terrorism'?
Obama said while terrorists do claim to be killing in the name of Islam, using the term would serve to legitimize their claims while also lumping in the billion Muslims around the world who are peaceful.
"What I learned from listening to some of these Muslim families, both in the United States and overseas, is that when you start calling these organizations Islamic terrorists, the way it is heard, the way it is received by our friends and allies around the world is that somehow Islam is terroristic," he said, "And that then makes them feel as if they're under attack. In some cases, it makes it harder for us to get their cooperation in fighting terrorism."
A female officer questioned the expanding roles of women in combat. She quoted statistics about women in combat, saying they perform worse in combat and suffer more injuries.
"Why were these tangible negative consequences disregarded?" she asked.
Obama said much talent has been gained by opening up more roles to women, and it was not done strictly for political correctness.
A mortuary affairs officer asked about NFL players who are refusing to stand for the national anthem.
Obama said "Part of what makes this country special is that we respect people's rights to have a different opinion."
One woman told Obama her husband waited for a year for a medical appointment with Veteran's Affairs, and when he finally saw a doctor hew was misdiagnosed, and his cancer was not treated.
Obama said his heart went out to her, and he had increased the VA budget by 85 percent during his time in the White House. But more remains to be done, he added.