That is not true. There are some features which makes only the GUI version slower, but it’s definitely not “almost always” that the GUI is the reason. There are a lot of features/packages which makes Emacs slower in general, no matter GUI/TUI.

So profiling, or bisecting the init file can be used find out the problem.

I also had this, git-gutter caused it. I switched to hl-diff, it doesn’t have this problem.

“In my experience Emacs simply isn’t a very good terminal to run a shell in anyway”

Do you know about vterm and eat? If yes, what is the problem with these?

This has nothing to do with the diff program. Ediff is not able to highlight whitespace differences like it highlights non-whitespace differences. Maybe it is possible to do somehow, but by default, whitespace differences generate a diff region with no highlights (or as ediff calls it, refinements).

It is because highlights are done on word level, and whitespaces are not words.

Emacs has electric-indent-chars. Whenever a character in this set is pressed, Emacs re-indents the current line. And as the indentation calculation is not perfect, it can happen that when you create a new line, its indentation calculated incorrectly, and during editing you press some electric-indent-char, which then re-indents the line.