It's showing you both PDFs overlaid on each other. The main window looks blurry because the main text has shifted vertically slightly. The regions that have changes are highlighted in the thumbnails on the left.
I agree it's not the best initial example to demonstrate the tool, but it does show how it can be used to detect even minor spacing changes.
If it was sharp, they would be identical. The “blurriness” is doubling, where the lines are not quite aligned. Red text there show you content that is in one and not the other.
