I might be wildly misreading the code, but it seems like [1,2,3,a,b,c] diffed with [a,b,c,1,2,3] is going to appear as six lines of replacement.

The table will be {a :(1,1), b :(1,1), ...} because each line appears in both files exactly once.

    do {
    c = a;
    d = b;
    // first pass a=0, b=0
    // the lines aren't equal, they're "1" and "a" so we pass this case.
    if (one[a] === two[b]) {
        equality();
    } else {
        //one[0] is "1", matching 1:(1,1)
        //two[0] is "a", matching a:(1,1)
        if (table[one[a]].two < 1 && table[two[b]].one < 1)     {
            //can't get here
            replaceUniques();
        } else if (table[one[a]].two < 1 && one[a + 1] !== two[b + 2]) {
            // 1:(1,1) cdr not less than 1, so this is out
            deletion();
        } else if (table[two[b]].one < 1 && one[a + 2] !== two[b + 1]) {
         // a:(1,1) car not less than 1, so this is out
            insertion();
        } else if (table[one[a]].one - table[one[a]].two === 1 && one[a + 1] !== two[b + 2]) {
            // 0 === one[a+1] !== two[b+2]
            //   === "2" !== "c"
            //   === true
            deletionStatic();
        } else if (table[two[b]].two - table[two[b]].one === 1 && one[a + 2] !== two[b + 1]) {
            // 0 === one[a+2] !== two[b+1]
            //   === "3" !== "b"
            //   === true
            insertionStatic();
        } else {
            // so we're stuck replacing.
            replacement();
        }
    }
    a += 1;
    b += 1;
    } while (a < lena && b < lenb);

it's very pretty, it just seems like it's not not doing enough lookahead to find those long distance relationships.

(although i didn't run it, i could have screwed up my interpretation)

in my limited experience, diff is very hard.

edit

fixed a couple typos in the comments.

yeah, three deletes and three inserts showing at least 3 lines of equality is preferable. ideally it'd show a single edit, move of 3 lines, but that's really hard to do.