Difftastic is a structural diff tool that compares files based on their syntax, understanding which pieces of syntax have changed and highlighting them in context. It supports over 30 programming languages and is compatible with git and other version control systems. The tool has some limitations, such as performance issues with large files and a lack of support for data formats like YAML and TOML. Difftastic is open source under the MIT license and has a community-driven development process.