The Alignment tab settings control the algorithm for aligning lines in the comparison.
Mark the Never align differences checkbox to show lines with important differences as blocks of added and deleted text rather than changed text.
Pick Unaligned to compare files without aligning lines based on their content.
Pick Standard alignment to align the files by comparing successively smaller sections of each file. Parts of the alignment can be shown before the entire comparison is finished.
Pick Myers O(ND) alignment to align the files using a common LCS (Longest Common Subsequence) algorithm. This can give better matches in certain cases, such as large inserts or when the files contain a lot of repeating text. Since files are compared all at once, larger file scans take much longer than the standard method, and the files are not displayed until the comparison is complete. It does not support similarity comparisons, so mismatches will be grouped in blocks.
Pick Patience Diff alignment to align the files using Bram Cohen's algorithm.
The Skew tolerance specifies the maximum number of lines that the algorithm will check when looking for a match to a particular line. Increasing it can improve the alignment, especially if there are large gaps. Of course, the comparison may also require more time.
Mark the Use closeness matching checkbox to attempt to align the remaining mismatched lines based on their similarity.
Note Regardless of these settings, the alignment algorithm will sometimes produce undesirable results. To manually align two lines, right-click one line and pick Align With and then click the second line.