wdiff is for word-diff:
wdiff program is a front end to diff for comparing files on a word per word basis. A word is anything between whitespace.
$ wdiff file1 file2
Bonus: colordiff is a wrapper for 'diff'. colordiff is written in Perl and produces the same output but with pretty 'syntax' highlighting.
$ wdiff file1 file2 | colordiff
$ wdiff file1 file2 | colordiff | less -R