Word 2007 includes a built-in comparison feature for working out what has changed between two documents, but the menu option for invoking the comparison includes so many options you can quickly get confused. The Word blog includes a comprehensive rundown on how the options work. While the default is to compare everything, unless you're proofing a document for formatting it makes sense to de-select some options: who cares about white space if what you're worried about is if text is changed or removed? For a cloud-centric way of comparing documents, check out how to compare documents in Google Docs.
Understanding Word 2007's Compare Feature Options
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