It is capable of providing character-by-character analysis and includes a text merge tool with an integrated editor. It can also compare and merge directories and can show the differences line by line and character by character. It also provides an automatic merge facility and an integrated editor for comfortable solving of merge-conflicts and it supports Unicode, UTF-8, and other codecs, autodetection via byte-order-mark "BOM" as well as KIO on KDE (allows accessing FTP, SFTP, fish, smb etc.). You can then print out the differences for later review.
KDiff3 also allows for manual alignment of lines, automatic merging of version control history ($Log$), and features Windows-Explorer integration Diff-Ext-for-KDiff3 - shell extension included in the installer (originally by Sergey Zorin: see also Diff Ext) KDE-Konqueror/Dolphin service menu plugin, simplified integration with IBM-Rational-ClearCase for Windows. All of the above from an intuitive graphical user interface.