Diff command will examine both file1 and file2 and tells you what changes need to be made for file1 and file2 to match.

$diff   file1.txt   file2.txt

Alternatively, you can have side-by-side merge of file differences
You can get a clear-cut visual difference between two text files using the command sdiff:

$ sdiff   file1.txt   file2.txt

These commands can be used for comparing directories as well.