What I was referring to is the situation where a file has local unsaved changes but is then also changed on disk, which can happen if you switch branch. 1.x then allows you to keep local version (old file) or reload file (new file, losing changes), 2.0 will do a 3-way merge, i.e. apply your local changes to the new version of the file on disk.
Clear, still it is pretty cool feature you describe. But then I hope you will integrate with "diff" compatible tools in case auto-merge fails?
Regards,