I was about to suggested a simplified version of the original one-function version but the new one is better. One change: name = lambda... is discouraged in the stdlib (Guido, pydev, a few years ago). Def statements require only 3 more chars and produce properly named objects for tracebacks.
  encode = lambda s: s
  def encode(s): return s

Under current rules, this is a 3.4 enhancement. For the context_diff and unified_diff doc change:
-  Compare a and b (lists of strings);
+  Compare string or bytes sequences a and b;   # (or)
+  Compare a and b (both sequences of strings or sequences of bytes);

Neither entry says anything at present about the type of from/tofile. Based on your patch, the following could go after the first sentence:
+"Arguments *fromfile* and *tofile* are normally strings but may be bytes if the items of *a* and *b* are."