Improve the diff editor when rendered in narrow containers

[hediet]

Sub-Tasks

### Tasks
- [ ] https://github.com/microsoft/vscode-copilot/issues/6249
- [ ] https://github.com/microsoft/vscode-copilot/issues/6615
- [ ] https://github.com/microsoft/vscode/issues/216484
- [ ] https://github.com/microsoft/vscode/issues/210793

[hediet]

Verification steps: Open inline chat (ctrl+i), enter a query, once it completes, click on "view in chat"

Before:

After, much denser view: (ignore color changes - verify it looks like this)

[sandy081]

I do not see inline diff, should I have to enable it?

[DonJayamanne]

Same here