$ hg init
$ mkdir alpha
$ touch alpha/one
$ mkdir beta
$ touch beta/two
$ hg add alpha/one beta/two
$ hg ci -m "start"
$ echo 1 > alpha/one
$ echo 2 > beta/two
everything
$ hg diff --nodates
diff -r 7d5ef1aea329 alpha/one
--- a/alpha/one
+++ b/alpha/one
@@ -0,0 +1,1 @@
+1
diff -r 7d5ef1aea329 beta/two
--- a/beta/two
+++ b/beta/two
@@ -0,0 +1,1 @@
+2
beta only
$ hg diff --nodates beta
diff -r 7d5ef1aea329 beta/two
--- a/beta/two
+++ b/beta/two
@@ -0,0 +1,1 @@
+2
inside beta
$ cd beta
$ hg diff --nodates .
diff -r 7d5ef1aea329 beta/two
--- a/beta/two
+++ b/beta/two
@@ -0,0 +1,1 @@
+2
relative to beta
$ cd ..
$ hg diff --nodates --root beta
diff -r 7d5ef1aea329 two
--- a/two
+++ b/two
@@ -0,0 +1,1 @@
+2
inside beta
$ cd beta
$ hg diff --nodates --root .
diff -r 7d5ef1aea329 two
--- a/two
+++ b/two
@@ -0,0 +1,1 @@
+2
$ cd ..