Diff preview shows full-width background color blocks instead of inline colored text (ANSI theme)

Description

Same version (v2.1.79), same theme ("Dark mode - ANSI colors only"), but diff rendering differs between two machines.

Expected (old machine)

Compact inline diff — only the line number and +/- marker are colored (red/green text), no background fill. Lines are visually compact and easy to scan.

Actual (new machine)

Full-width background color blocks (red for deletions, green for additions) spanning the entire line, with extra vertical spacing between diff lines. Much heavier visually.

Screenshots

Expected (old machine) — inline colored text, no background:

<img width="600" alt="expected-diff" src="https://github.com/user-attachments/assets/placeholder-expected">

Actual (new machine) — full-width background blocks:

<img width="600" alt="actual-diff" src="https://github.com/user-attachments/assets/placeholder-actual">

(Will attach screenshots in comments)

Environment

• Claude Code v2.1.79
• macOS (Darwin 25.3.0)
• Terminal: Ghostty
• Theme: Dark mode (ANSI colors only) / dark-ansi

Notes

• Both machines use the same theme selection
• No user-facing setting found to toggle between these two diff styles
• The old (inline) style is strongly preferred — cleaner and less visually noisy
• Would appreciate either: (a) restoring the old inline style as default for ANSI themes, or (b) adding a setting to choose between inline vs background-block diff styles