Let's see it in action. Take a look at this pair of files with fuzzy matching disabled: the changed block shown looks rather ugly, and the similarities between the two files are difficult to see.
Previously, the only way to align similar lines was to use manual synchronization, as shown below. However, manual synchronization can be time consuming. Fuzzy matching can now do the same thing, automatically.
We can enable fuzzy matching from the new Options | Compare | Advanced panel. Settings on this panel allow you to automatically enable fuzzy matching for files below a certain size (because fuzzy matching can slightly slow down comparison for large files) and to set the fuzzy similarity threshold (lines with a lower % of similarity will not be matched).
After enabling fuzzy matching and hitting Re-compare, you would get something like this:
As you can see, similar lines are now automatically matched, and the comparison view is much cleaner.