Depends on what you want to achieve? When diffing source code, comparing lines, without caring too much about the broader context, may be a good-enough proxy of what you ideally want to compare, which is the program’s logic. But for the latter, you would first have to execute both programs, and diff their parse trees.

Likewise – and perhaps most notoriously – simple line-based diffing does not suffice for diffing prose (natural language text), where knowledge of the broader context, markup (semantics in punctuation and document structure), and paragraph order are crucially important.

Besides the rudimentary one, used by Github (https://github.com/blog/1784-rendered-prose-diffs), I do not know of any production-ready prose-diffing implementation.

But here is an interesting proof of concept: http://www.gigamonkeys.com/tmp/test-diff.html