Redline
The marked-up comparison itself, and the verb for producing one. Where the word comes from, and what it does and does not imply about how it was made.
What it is
A redline is a version of a document that shows what changed from an earlier version. Insertions appear underlined, deletions appear struck through where they stood, and the unchanged text sits between them so you can read the whole thing as a document rather than as a list of edits.
The name is literal. Before documents were exchanged as files, a reviewer marked up a printed draft in red pen, and what came back was the redline. The convention survived the paper: colour still distinguishes the two sides of a change, and marking deletions in place rather than removing them is still the point, because a deletion you cannot see is a deletion you cannot argue with.
Redline as a verb
To redline a document is to mark it up — to go through someone else's draft and record what you want changed. "I'll redline it tonight" means the drafting, not the file format. "Send me the redline" means the marked-up result.
Both senses are ordinary in practice, and which one is meant is almost always obvious from context. The one place it matters is when someone asks for "the redline against the last version" — they want a comparison between two specific drafts, and which two is a question worth asking rather than assuming.
How they are made
A redline can be produced in two quite different ways, and knowing which you are looking at tells you how much to trust it.
It can be recorded as it is written, which is what tracked changes does: the editor notes each edit as the author makes it, with a name attached. Or it can be derived afterwards, by taking two finished versions and computing the differences between them. Word's Compare feature does this, as do dedicated comparison tools, as does this one.
A derived redline has a useful property: it does not depend on the other side having remembered to turn tracking on. It also has a limit, which is that it can only report what differs between the two texts, not what the person was thinking. A rewritten sentence may be shown as one wholesale replacement even if the author would have described it as three small changes.
What it does not mean
In finance and in some regulatory contexts, "redline" occasionally refers to a limit that must not be crossed, and in American history "redlining" names a discriminatory lending practice with nothing whatever to do with documents. Neither sense turns up in drafting, but they are worth knowing about before searching for the word in an unfamiliar setting.