How does this compared to differential synchronization used by google drive? https://neil.fraser.name/writing/sync/
More specifically, by Google Drive, I assume you mean Google Docs. And Google Docs doesn't use diffsync, it uses OT.
why doesn't google docs use DS? Who uses DS?
What's the best choice of making something similar to google docs' co-edit feature?
The wiki article includes information that should answer your last question as well.
https://operational-transformation.github.io/visualization.h...
it has a live visualization of the OT algorithm