Merge editor is not showing focused diffs

[dpabin-cedar]

Type: Bug

Merge a branch into another with a conflicting change for a file that exists on both (one or two lines is enough)

• Unsure whether this matters, but I created file independently on each branch

Open the file in merge editor

Expected behavior - each diff would be highlighted as it's own conflict that can be resolved independently of the others

What happens - each file is treated as a singular block of conflicting code

VS Code version: Code - Insiders 1.99.0-insider (Universal) (299b150, 2025-03-24T05:03:53.092Z)
OS version: Darwin arm64 22.6.0
Modes:

System Info

Item	Value
CPUs	Apple M2 Max (12 x 2400)
GPU Status	2d_canvas: enabled canvas_oop_rasterization: enabled_on direct_rendering_display_compositor: disabled_off_ok gpu_compositing: enabled multiple_raster_threads: enabled_on opengl: enabled_on rasterization: enabled raw_draw: disabled_off_ok skia_graphite: disabled_off video_decode: enabled video_encode: enabled webgl: enabled webgl2: enabled webgpu: enabled webnn: disabled_off
Load (avg)	2, 2, 2
Memory (System)	32.00GB (0.24GB free)
Process Argv	--crash-reporter-id e15f3fbb-b08f-4a0d-90b9-b80e21aa6fac
Screen Reader	no
VM	0%

Extensions (12)

Extension	Author (truncated)	Version
markdown-mermaid	bie	1.27.0
vscode-eslint	dba	3.0.10
gitlens	eam	16.3.3
prettier-vscode	esb	11.0.0
copilot	Git	1.290.1457
copilot-chat	Git	0.26.2025032401
intellij-idea-keybindings	k--	1.7.4
debugpy	ms-	2025.4.1
isort	ms-	2023.10.1
python	ms-	2025.2.0
vscode-pylance	ms-	2025.3.2
remote-containers	ms-	0.407.0

A/B Experiments

vsliv368:30146709
vspor879:30202332
vspor708:30202333
vspor363:30204092
pythonvspyt551:31249597
vscod805:30301674
py29gd2263:31024238
14231c-codexv2:31264650
c4g48928:30535728
a9j8j154:30646983
962ge761:30841072
dsvsc014:30777825
dsvsc015:30821418
2e7ec940:31000449
pythontbext0:30879054
cppperfnew:30980852
dwnewjupyter:31046869
nativerepl1:31134653
pythonrstrctxt:31093868
nativeloc1:31118317
e80f6927:31120813
iacca1:31150324
dwcopilot:31158714
c3hdf307:31184662
6074i472:31201624
dwoutputs:31242946
customenabled:31248079
9064b325:31222308
copilot_t_ci:31222730
f27dg485:31264363
g012b348:31231168
jda6j935:31233686
copilothoveron:31262361
pythoneinst12:31251391
notreesitterini:31263227
bgtreat:31252123
fh1c7952:31247580
31787653:31262186
793h1473:31266633
pythonpulldiagcf:31258011
6gi0g917:31259950
ceih0514:31264451
996jf627:31264550

[hediet]

/duplicate
This is because of 3 way merge with base vs 2 way merge.