I'm tagging this to MediaWiki-General because I'm not sure how active the maintainer(s) of Page-diffs is/are, given that these complaints have been around for years and years.
As a preview, here are a few recent complaints about the behavior of Diff:
https://en.wikipedia.org/w/index.php?title=&diff=prev&oldid=1004598077
https://en.wikipedia.org/w/index.php?diff=997882178
https://en.wikipedia.org/wiki/Special:MobileDiff/965624274
I want to preface the following by distinguishing the following criticisms about Diff from any criticism of the people behind it. I'm greatly thankful to everyone who contributes to MediaWiki.
Now, let me turn to the DifferenceEngine itself. It ain't good enough! I'll quote another editor: "I've often found that Wikipedia's diffs infuriate me. Can't they scrap the whole thing, copy-paste code from KDiff3 or Meld, so we can finally have proper diffs?" A project as mature as Wikipedia deserves a better Diff - as do its lovely editors.
Firstly, I would repeat that question: should MediaWiki consider plugging in a well-established, well-regarded difference engine?
If not, then I'd suggest working through the bugfix/feature requests from Wikipedia editors at https://en.wikipedia.org/wiki/Help_talk:Diff . I'd specifically draw your attention to this recent one (January 2021), because it has concrete suggestions: https://en.wikipedia.org/wiki/Help_talk:Diff#Better_white-space_handling_needed