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show diffs in more readable minimal format, allow customizations #2884

@yionis01

Description

@yionis01

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Description:

When the CLI's edit tool shows diffs, it highlights entire lines as changed even when only a small part of the line differs. This is especially noisy when reordering items in a numbered list — the entire section lights up as changed when the only real difference is the line
number.

Example: Reordering items 5-10 in a markdown list shows all 6 lines as removed and re-added, when the meaningful change is just swapping two items. The line number changes (e.g., 5. → 6.) dominate the diff and obscure the actual content change.

Requested improvement: Add a configuration option (e.g., in ~/.copilot/config.json or a /diff-mode command) to control diff rendering. Options could include:

  • Word-level diff — highlight only changed words/tokens within a line (similar to git diff --color-words)
  • Minimal diff — suppress unchanged context lines and show only the meaningful delta
  • Current behavior — full line-level diff (default)

Why it matters: For users doing heavy file editing sessions (e.g., maintaining markdown docs, reordering lists, updating dashboards), the current diffs require significant mental effort to parse. A word-level or minimal diff mode would make reviewing changes much faster and
reduce approval fatigue.

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    area:configurationConfig files, instruction files, settings, and environment variablesarea:terminal-renderingDisplay and rendering: flickering, scrolling, line wrapping, output formatting
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