Open Source differencing and merging tool for Windows. WinMerge can compare both folders and files, presenting differences in a visual text format that is easy to understand and handle.
SpecsUpdate
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Pros
Pro File edition
You can quickly copy changed lines (or files in folder comparison) in both directions with keyboard shortcuts. You can edit the files as well, with syntax highlighting of some languages.
Pro Compare folders and files
Can show what files has been changed in a folder, allows comparing files in tabs.
Pro In line comparison
Can show differences within a line.
Pro Free & Open source
Winmerge is a free and open source tool.
Pro Good shell integration
Select two files and compare them. Alternatively, select one file, navigate elsewhere, select the other file to compare.
Also supports drag'n'drop of files / folders from Explorer.
History of past comparisons.
Pro Lightweight, quick startup
Binary is less than 3 MB, so it starts quickly
Pro Filters
Can filter out files for folder comparison, lines for file comparisons, with regular expressions.
Options also allow to ignore whitespace differences, white lines, case change, line-ending changes, etc.
Pro Good navigation
Keyboard shortcuts (and toolbar buttons) to navigate to next (previous) difference, side panel shows a map of the files with changed lines and allows to jump to a given place.
Pro Good detection of moved lines
Detects when a block of lines has been moved in the file and shows the relation.
Cons
Con Windows only
It's only available for Windows. No Mac or Linux versions available. It is possible to run in Linux via WINE, although a bit unstable.
Con Development is spotty
The latest version (2.16.0) was released in November 2018. Before that the last official release was made in 2013. The 2.16.0 is actually one of the two forks (Winmerge-v2-jp) that were kept maintained throughout the years, it just got named as the official release.
The other fork, WinMerge2011 is still being actively developed too. It's on par with the historical version, and has additional features such as showing only differences and a 64-bit version.
An 'official' list of forks is maintained here.
Con No 3-way merge
Cannot merge 3 files, can do only comparisons by pairs.
Makes it unsuitable for merging operations, still useful to compare two versions in the history.