When two buffers are compared for differences, M-x ediff-buffers does not indicate the specific characters that have changed within a word (ie "character-level" diffs). Most modern diff tools will show the diffs within a word.
Emacs seems to be missing this important (or obviously useful?) feature by default. How can I make Emacs display the diffs by character?
Update
Here's M-x ediff-buffers diff1 diff2, using emacs -Q to ensure that my theme is not interferring:

Here's the same text pasted into Meld:
