diff is a tool for comparing two input files and informing the user either via the standard output or a file as to the differences between them. It supports both ASCII and Binary comparisons allowing you to check for differences and similarities in both text/source files and compiled binaries. It's primary application is for use with the patch tool, allowing you to merge two source code files based on the output of a diff comparison.
To view two files side-by-side, make a wide terminal window and run this:
$ diff -W163 --side-by-side file1 file2 |less
The center column will indicate the differences (see man page).
$ diff -up $ORIG_FILE $NEW_FILE > my-patch.diff
Or for multiple files/directories:
$ diff -uprN $ORIG_DIR $NEW_DIR > my-patch.diff