README.md

Copy nbflatten.py to somewhere on $PATH. Then, in the root of a git repository, run these commands:

echo "*.ipynb diff=ipynb" >> .gitattributes 
git config diff.ipynb.textconv nbflatten.py

When you change a notebook and run git diff, you'll see the diff of flattened, simplified notebooks, rather than the full JSON. This does lose some information (metadata, non-text output), but it makes it easier to see simple changes in the notebook.

This doesn't help with merging conflicting changes in notebooks. For that, see nbdiff.org.

nbflatten.py

#!/usr/bin/python3
import sys
from IPython.nbformat.current import read
from IPython.utils.text import strip_ansi

fname = sys.argv[1]
with open(fname, encoding='utf-8') as f:
    nb = read(f, 'ipynb')

banners = {
'heading':  'Heading %d ------------------',
'markdown': 'Markdown cell ---------------',
'code':     'Code cell -------------------',
'raw':      'Raw cell --------------------',
'output':   'Output ----------------------',
}

for cell in nb.worksheets[0].cells:
    if cell.cell_type == 'heading':
        print(banners['heading'] % cell.level)
    else:
        print(banners[cell.cell_type])

    if cell.cell_type == 'code':
        source = cell.input
    else:
        source = cell.source
    
    print(source)
    if not source.endswith('\n'):
        print()
    
    if cell.cell_type == 'code':
        if cell.outputs:
            print(banners['output'])
            for output in cell.outputs:
                if 'text' in output:
                    print(strip_ansi(output.text))
                elif 'traceback' in output:
                    print(strip_ansi('\n'.join(output.traceback)))
                else:
                    print("(Non-plaintext output)")
        print()