This screenshot shows the difference between two text files (using an early version of KDiff3):

3-way-merging is fully supported. This is useful if two people change code independently. The original file (the base) is used to help KDiff3 to automatically select the correct changes. The merge-editor below the diff-windows allows you to solve conflicts, while showing you the output you will get. You can even edit the output. This screenshot shows three input files being merged:

KDiff3 also helps you to compare and merge complete folders. This screenshot shows KDiff3 during a folder merge: