Sure the reviewer could run `wdiff`, but it's an extra manual step due to a completely cosmetic and useless formatting style. If you're perusing hundreds of diffs, deciding when to applying whitespace significant vs insignificant diffs is a distraction, and it can't be done automatically.

You can fantasize about better diffs. Why isn't a diff applied directly to the abstract syntax trees of a language, for example? However, I think part of the robustness of version control systems comes from keeping things simple, namely line-based diffs, and with that comes a preference for keeping line-based diffs short.