Mercurial actually has a whole lot more information: it knows what each of us changed and can reapply those changes, rather than just looking at the final product and trying to guess how to put it together.

For example, if I change a function a little bit, and then move it somewhere else, Subversion doesn’t really remember those steps, so when it comes time to merge, it might think that a new function just showed up out of the blue. Whereas Mercurial will remember those things separately: function changed, function moved, which means that if you also changed that function a little bit, it is much more likely that Mercurial will successfully merge our changes.