Correct. Solely relying on the built in Word Compare tool results in a whole host of version control issues, however, which I outline in detail in my post "On Building Git for Lawyers."
Git supports registering custom diff tools for specific file types [1]
Wouldn't the obvious solution then be to take the tool they already use for redlining (e.g. Word's compare function) and integrate it into a git workflow?
https://theredline.versionstory.com/p/on-building-git-for-la...