In typical Microsoft fashion it has enough to check the box but not enough to actually be useful.
Does it generate diffs/patches that ultimately can be used to reconstruct the document? Can I take a document and apply a patch and get exactly the same as you get? Can I reorder and edit patches? The answer is no.
Interesting, I didn't know Tex users would want those sort of facilities. I've used Word with track changes in enterprise environments and it does the job, I've never had to use patches for it though (and wouldn't).
For enterprise environments, where demands usually are low to non-existent, Word does fine. In academic environments, when journals are involved, when a document is being worked on by several people simultaneously (in varying meanings of that word) and when data may come from several different outside sources, it is massively inadequate.
I think there is demand of these features for Word users in the enterprise. Version tracking or reusing templates is huge productivity boost and also helps reducing mistakes. It is only that enterprise users have never thought of that because they don't know it is even possible.
Word with integrated git-like history would be a godsend if someone could develop it. As it is, it's easier to either cripple along with track changes and friends or teach everyone how to use Markdown or LaTeX.
Does it generate diffs/patches that ultimately can be used to reconstruct the document? Can I take a document and apply a patch and get exactly the same as you get? Can I reorder and edit patches? The answer is no.