I just discovered a git feature that has eluded me since v1.4.3, when it was introduced. It's a way to colour differing words in git diff output. Maybe you don't know about it either... allow me demonstrate:

Let's initialize a simple tree:

    # git init
    # echo some existing text > file
    # git add file
    # git commit -m"some commit" file
    # echo some changed text and some new > file

So now we have a tree with a file that contains one word altered.

Here is a comparison of git-diff with and without the --color-words option: