@Writ_Keeper has a very neat script that adds an [inline diff] button to Watchlist entries, and then when clicked, embeds the diff of the change inline, and marks it as read: https://en.wikipedia.org/wiki/User:Writ_Keeper/Scripts/inlineDiffDocs

I think this would fit well in the recent watchlist enhancements, maybe by adding a checkbox to the new watchlist settings panel that says "Open diffs inline", and if enabled, when you click on the diff link, it opens it inline.