It should apply on
a per-window basis, so you may have to execute it in each diff
window.
Or if you're feeling lazy,
:windo set wrap
:windo set nowrap
If you only have the two diff windows open, this is about as
efficient as "control+W control+W at colon" to change windows and
re-execute the last-issued commandline. Also, less finger
dancing and a bit more readable.
However, if you have multiple windows open, and only a subset of
them are "diff" windows, the "windo" solution may effect windows
that you don't want it to.
But yes, this is helpful for easily changing a settings in all
the open windows.
-tim