> It's designed the way it is to achieve that goal while minimizing the space used, yet keeping an entire history of the project

Most of git's design was done before they thought of 'minimizing the space used'. Originally, they didn't even do deltas and just stored complete snapshots for every object.

> Merge conflicts are hard in this model because you're trying to put two snapshots together, not just two diffs.

I don't think that's the case at all. Thanks to three-way-merges git has just as much access to the diffs as any other version control system when merging. It's just that in git diffs are a derived data structure, not a source of truth, but that doesn't make a difference.