If you could provide a use case to demonstrate how Git+latex is a winner, I'd genuinely appreciate it!
Edit: As soon as I submitted this it occurred to me that for collaborative editing Git is the obvious choice.
You can somewhat improve the situation if you adopt a somewhat weird source-formatting policy, where you write each sentence on one separate long-ish line, rather than flowing by paragraph. Then you will be able to automatically merge as long as nobody has made an edit or move that touches the same sentence, giving you better merge granularity. But even then conflicts happen pretty often, and few people like this style of formatting (maybe it'd work better with tool support).
For a book this might work better, though, because I assume you'd be making less frequent edits, and people would less often be working at the same time.
As stated above, Dropbox doesn't even try to merge files, but Git does, which is definitely an advantage (at the very least, it tells you where the conflicts are, which is far more reliable than trying to work out the conflicts by hand, or with a separate diffing tool).
Merges: Git does all the bookkeeping for collaboration -- if you have two people making changes, it's much easier to merge them with VCS. Or an independent contributor can use rebase to, as the manual page succinctly puts it, "forward-port local commits to the updated upstream head."
Discussion: If you use a Web-based product like Github or Gitlab (an open-source, self-hostable GitHub clone), you get an issue tracker and a dedicated discussion thread for individual changes.
Merging. People can work on the manuscript at the same time, and as long as they edited non-overlapping regions, git will merge both contributions silently and painlessly.
Editing a word processor document stored in a shared Dropbox folder, I guess you'd need to inspect both new versions and do the merge manually?
edit: just saw your edit :)
Particularly with the fuzzy temporal revs thing, e.g. HEAD@{1 week ago}
This article is a start, but it would probably be stronger if the author had a nuts-and-bolts tutorial about how to use Git from the point of view of someone whose use case involves LaTeX markup rather than source code.