>In a legal document negotiated between parties you don't want to keep track of every version of the file, just the latest version of the offered terms and counteroffered terms.

Not true, at least from the point of view of a litigator.

The changes to an agreement can be crucial, especially in the absence of an entire agreement clause. There are, of course, rules about using evidence outside the agreement to construe its meaning, but many exceptions to this rule exist - eg, mistake. The biggest exception is ambiguity, where previous additions/deletions serve to highlight what the parties' intentions were at the time of agreement.