The Analysis Detail Level determines how the files are compared:
In Lines Only mode, DiffMerge compares the files line-by-line and does not perform any intra-line highlighting/analysis.
This is the fastest mode. Switch to it if you're working with large files and/or having performance problems.
In Lines and Characters mode, DiffMerge performs the line-by-line analysis and then performs intra-line analysis within each of the changes. Intra-line analysis is performed over the body of each change and is governed by the following setting.