The idea would be to use an unpacked format for library authoring (i.e. the official library Git repository would be unpacked) and a packed format for distribution (to make KiCad faster). The packed format would likely also be compressed at that point.
As @retiredfeline says, there is really no point to forcing the libraries to be in the same format for editing as distribution. Related: it’s also desired to allow embedding 3D models inside footprint libraries, etc. Distribution libraries should be optimized for performance and file size, meaning they should be single-file and compressed. VCS diffing of these distribution libraries is not a relevant feature in comparison.