I came across a clear and concise blog entry that describes how to enable prose diffs (i.e., word diffs) when using git, with examples. This nicely demonstrates how you can get output in the same spirit as track changes.

http://blogs.atlassian.com/2013/06/git-diff/

Here's the quick command:

 $ git diff --word-diff --color-words

Note that this isn't limited to git. The git example is just an easy way to show what is possible.