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If you set textDiff: {minLength: 0}, the text diff falls back to the default minLength of 60 characters. This prevents two single letter commits to merge properly.
Setting minLength to 1 allows two strings with at least 2 characters to properly diff merge. However for changes such as:
"" => "a" and "" => "b" the merge simply takes the later one. If any further updates on a is made, it is also replaced by b.