Beyond Compare is quite good at comparing files and folders. It can show the differences in different colors and that makes us compare different source code files or even the entire directory easily. You can even compare binary files and do a CRC checksum to see if they match.
However, Beyond Compare is not free. Well, There are so many such free File Comparing Tools out there. One such editor is Cream. An enhanced Vi Editor and lots of User Interface enhancements. It will also let you compare files for instance.
The other ones like WinMerge, FreeFileSync etc are also good. So bottom line is, lots of free ones are there for you to compare the content of files or folders.
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Screenshot of Meld