The side-by-side diff is sometimes very bad at matching up unchanged lines. In particular, indentation changes really screw with things.
Sourcegear's Diffmerge is a desktop application I use locally, and it usually shows a better side-by-side diff for the same review. This gives me hope that Phabricator can do better.
Strangely, the yellow bar in the margin -- the one that indicates which lines were copied -- seems to do a better job than the actual diff highlighting. Maybe I'm imagining things?
Where in the code should I look if I want to mess with the side-by-side diff algorithm?