diff --git a/CLAUDE.md b/CLAUDE.md
index 892e4c30..d7fa7458 100644
--- a/CLAUDE.md
+++ b/CLAUDE.md
@@ -222,7 +222,7 @@ interface Block {
 - Horizontal rules (`---`)
 - Paragraphs (default)
 
-`exportDiff(blocks, annotations, globalAttachments)` generates human-readable feedback for Claude. Images are referenced by name: `[image-name] /tmp/path...`.
+`exportAnnotations(blocks, annotations, globalAttachments)` generates human-readable feedback for Claude. Images are referenced by name: `[image-name] /tmp/path...`.
 
 ## Annotation System
 
diff --git a/apps/marketing/src/content/docs/getting-started/ui-settings.md b/apps/marketing/src/content/docs/getting-started/ui-settings.md
index 2f182d6b..3a0075df 100644
--- a/apps/marketing/src/content/docs/getting-started/ui-settings.md
+++ b/apps/marketing/src/content/docs/getting-started/ui-settings.md
@@ -92,7 +92,7 @@ Controls what the **Cmd/Ctrl+S** keyboard shortcut does.
 | Option | Behavior |
 |--------|----------|
 | **Ask each time** (default) | Opens the Export dialog |
-| **Download Diff** | Downloads the diff file directly |
+| **Download Annotations** | Downloads the annotations file directly |
 | **Obsidian** | Saves directly to your Obsidian vault (only shown if Obsidian is enabled) |
 | **Bear** | Saves directly to Bear (only shown if Bear is enabled) |
 
diff --git a/apps/portal/ANNOTATE.md b/apps/portal/ANNOTATE.md
index 1a78c55d..3c346aa9 100644
--- a/apps/portal/ANNOTATE.md
+++ b/apps/portal/ANNOTATE.md
@@ -85,7 +85,7 @@ Users can also paste or upload images and attach them to annotations.
 
 When the user clicks "Send Annotations" (or presses `Cmd+Enter`), the frontend:
 
-1. Calls `exportDiff(blocks, annotations, globalAttachments)` from `packages/ui/utils/parser.ts` to generate a structured markdown summary
+1. Calls `exportAnnotations(blocks, annotations, globalAttachments)` from `packages/ui/utils/parser.ts` to generate a structured markdown summary
 2. POSTs the result to `/api/feedback`
 
 The export format looks like:
@@ -165,7 +165,7 @@ Agent receives structured feedback, acts on it
 | `packages/server/annotate.ts` | Annotate server implementation |
 | `packages/editor/App.tsx` | Frontend — detects `annotateMode`, adjusts UI |
 | `packages/ui/components/Viewer.tsx` | Markdown renderer + web-highlighter annotation |
-| `packages/ui/utils/parser.ts` | `parseMarkdownToBlocks()` and `exportDiff()` |
+| `packages/ui/utils/parser.ts` | `parseMarkdownToBlocks()` and `exportAnnotations()` |
 | `apps/hook/commands/plannotator-annotate.md` | Claude Code slash command definition |
 | `apps/opencode-plugin/commands/plannotator-annotate.md` | OpenCode slash command definition |
 
diff --git a/packages/editor/App.tsx b/packages/editor/App.tsx
index c50255e7..281833a1 100644
--- a/packages/editor/App.tsx
+++ b/packages/editor/App.tsx
@@ -1,5 +1,5 @@
 import React, { useState, useEffect, useMemo, useRef } from 'react';
-import { parseMarkdownToBlocks, exportDiff, extractFrontmatter, Frontmatter } from '@plannotator/ui/utils/parser';
+import { parseMarkdownToBlocks, exportAnnotations, extractFrontmatter, Frontmatter } from '@plannotator/ui/utils/parser';
 import { Viewer, ViewerHandle } from '@plannotator/ui/components/Viewer';
 import { AnnotationPanel } from '@plannotator/ui/components/AnnotationPanel';
 import { ExportModal } from '@plannotator/ui/components/ExportModal';
@@ -365,7 +365,7 @@ const App: React.FC = () => {
   const [shareBaseUrl, setShareBaseUrl] = useState<string | undefined>(undefined);
   const [repoInfo, setRepoInfo] = useState<{ display: string; branch?: string } | null>(null);
   const [showExportDropdown, setShowExportDropdown] = useState(false);
-  const [initialExportTab, setInitialExportTab] = useState<'share' | 'diff' | 'notes'>();
+  const [initialExportTab, setInitialExportTab] = useState<'share' | 'annotations' | 'notes'>();
   const [noteSaveToast, setNoteSaveToast] = useState<{ type: 'success' | 'error'; message: string } | null>(null);
   const viewerRef = useRef<ViewerHandle>(null);
   const containerRef = useRef<HTMLElement>(null);
@@ -584,7 +584,7 @@ const App: React.FC = () => {
 
       // Include annotations as feedback if any exist (for OpenCode "approve with notes")
       if (annotations.length > 0 || globalAttachments.length > 0) {
-        body.feedback = diffOutput;
+        body.feedback = annotationsOutput;
       }
 
       await fetch('/api/approve', {
@@ -606,7 +606,7 @@ const App: React.FC = () => {
         method: 'POST',
         headers: { 'Content-Type': 'application/json' },
         body: JSON.stringify({
-          feedback: diffOutput,
+          feedback: annotationsOutput,
           planSave: {
             enabled: planSaveSettings.enabled,
             ...(planSaveSettings.customPath && { customPath: planSaveSettings.customPath }),
@@ -627,7 +627,7 @@ const App: React.FC = () => {
         method: 'POST',
         headers: { 'Content-Type': 'application/json' },
         body: JSON.stringify({
-          feedback: diffOutput,
+          feedback: annotationsOutput,
           annotations,
         }),
       });
@@ -733,19 +733,19 @@ const App: React.FC = () => {
     // This is just a placeholder for future custom logic
   };
 
-  const diffOutput = useMemo(() => exportDiff(blocks, annotations, globalAttachments), [blocks, annotations, globalAttachments]);
+  const annotationsOutput = useMemo(() => exportAnnotations(blocks, annotations, globalAttachments), [blocks, annotations, globalAttachments]);
 
   // Quick-save handlers for export dropdown and keyboard shortcut
-  const handleDownloadDiff = () => {
+  const handleDownloadAnnotations = () => {
     setShowExportDropdown(false);
-    const blob = new Blob([diffOutput], { type: 'text/plain' });
+    const blob = new Blob([annotationsOutput], { type: 'text/plain' });
     const url = URL.createObjectURL(blob);
     const a = document.createElement('a');
     a.href = url;
-    a.download = 'annotations.diff';
+    a.download = 'annotations.md';
     a.click();
     URL.revokeObjectURL(url);
-    setNoteSaveToast({ type: 'success', message: 'Downloaded diff' });
+    setNoteSaveToast({ type: 'success', message: 'Downloaded annotations' });
     setTimeout(() => setNoteSaveToast(null), 3000);
   };
 
@@ -803,7 +803,7 @@ const App: React.FC = () => {
       const bearOk = getBearSettings().enabled;
 
       if (defaultApp === 'download') {
-        handleDownloadDiff();
+        handleDownloadAnnotations();
       } else if (defaultApp === 'obsidian' && obsOk) {
         handleQuickSaveToNotes('obsidian');
       } else if (defaultApp === 'bear' && bearOk) {
@@ -819,7 +819,7 @@ const App: React.FC = () => {
   }, [
     showExport, showFeedbackPrompt, showClaudeCodeWarning, showAgentWarning,
     showPermissionModeSetup, showUIFeaturesSetup, pendingPasteImage,
-    submitted, isApiMode, markdown, diffOutput,
+    submitted, isApiMode, markdown, annotationsOutput,
   ]);
 
   // Close export dropdown on click outside
@@ -1009,13 +1009,13 @@ const App: React.FC = () => {
                     </button>
                   )}
                   <button
-                    onClick={handleDownloadDiff}
+                    onClick={handleDownloadAnnotations}
                     className="w-full text-left px-3 py-1.5 text-xs hover:bg-muted transition-colors flex items-center gap-2"
                   >
                     <svg className="w-3.5 h-3.5 text-muted-foreground" fill="none" viewBox="0 0 24 24" stroke="currentColor" strokeWidth={2}>
                       <path strokeLinecap="round" strokeLinejoin="round" d="M4 16v1a3 3 0 003 3h10a3 3 0 003-3v-1m-4-4l-4 4m0 0l-4-4m4 4V4" />
                     </svg>
-                    Download Diff
+                    Download Annotations
                   </button>
                   {isApiMode && isObsidianConfigured() && (
                     <button
@@ -1136,7 +1136,7 @@ const App: React.FC = () => {
           onClose={() => { setShowExport(false); setInitialExportTab(undefined); }}
           shareUrl={shareUrl}
           shareUrlSize={shareUrlSize}
-          diffOutput={diffOutput}
+          annotationsOutput={annotationsOutput}
           annotationCount={annotations.length}
           taterSprite={taterMode ? <TaterSpritePullup /> : undefined}
           sharingEnabled={sharingEnabled}
diff --git a/packages/server/index.ts b/packages/server/index.ts
index b0c14572..74ae848d 100644
--- a/packages/server/index.ts
+++ b/packages/server/index.ts
@@ -312,11 +312,11 @@ export async function startPlannotatorServer(
             // Save annotations and final snapshot (if enabled)
             let savedPath: string | undefined;
             if (planSaveEnabled) {
-              const diff = feedback || "";
-              if (diff) {
-                saveAnnotations(slug, diff, planSaveCustomPath);
+              const annotations = feedback || "";
+              if (annotations) {
+                saveAnnotations(slug, annotations, planSaveCustomPath);
               }
-              savedPath = saveFinalSnapshot(slug, "approved", plan, diff, planSaveCustomPath);
+              savedPath = saveFinalSnapshot(slug, "approved", plan, annotations, planSaveCustomPath);
             }
 
             // Use permission mode from client request if provided, otherwise fall back to hook input
diff --git a/packages/server/storage.ts b/packages/server/storage.ts
index ec9321d2..c776d390 100644
--- a/packages/server/storage.ts
+++ b/packages/server/storage.ts
@@ -65,35 +65,35 @@ export function savePlan(slug: string, content: string, customPath?: string | nu
 }
 
 /**
- * Save annotations (diff) to disk.
+ * Save annotations to disk.
  * Returns the full path to the saved file.
  */
-export function saveAnnotations(slug: string, diffContent: string, customPath?: string | null): string {
+export function saveAnnotations(slug: string, annotationsContent: string, customPath?: string | null): string {
   const planDir = getPlanDir(customPath);
-  const filePath = join(planDir, `${slug}.diff.md`);
-  writeFileSync(filePath, diffContent, "utf-8");
+  const filePath = join(planDir, `${slug}.annotations.md`);
+  writeFileSync(filePath, annotationsContent, "utf-8");
   return filePath;
 }
 
 /**
  * Save the final snapshot on approve/deny.
- * Combines plan and diff into a single file with status suffix.
+ * Combines plan and annotations into a single file with status suffix.
  * Returns the full path to the saved file.
  */
 export function saveFinalSnapshot(
   slug: string,
   status: "approved" | "denied",
   plan: string,
-  diff: string,
+  annotations: string,
   customPath?: string | null
 ): string {
   const planDir = getPlanDir(customPath);
   const filePath = join(planDir, `${slug}-${status}.md`);
 
-  // Combine plan with diff appended
+  // Combine plan with annotations appended
   let content = plan;
-  if (diff && diff !== "No changes detected.") {
-    content += "\n\n---\n\n" + diff;
+  if (annotations && annotations !== "No changes detected.") {
+    content += "\n\n---\n\n" + annotations;
   }
 
   writeFileSync(filePath, content, "utf-8");
diff --git a/packages/ui/components/ExportModal.tsx b/packages/ui/components/ExportModal.tsx
index 34001d64..4ae98d21 100644
--- a/packages/ui/components/ExportModal.tsx
+++ b/packages/ui/components/ExportModal.tsx
@@ -1,8 +1,8 @@
 /**
- * Export Modal with tabs for Share, Raw Diff, and Notes
+ * Export Modal with tabs for Share, Annotations, and Notes
  *
  * Share tab (default): Shows shareable URL with copy button
- * Raw Diff tab: Shows human-readable diff output with copy/download
+ * Annotations tab: Shows human-readable annotations output with copy/download
  * Notes tab: Save plan to Obsidian/Bear without approving
  */
 
@@ -15,7 +15,7 @@ interface ExportModalProps {
   onClose: () => void;
   shareUrl: string;
   shareUrlSize: string;
-  diffOutput: string;
+  annotationsOutput: string;
   annotationCount: number;
   taterSprite?: React.ReactNode;
   sharingEnabled?: boolean;
@@ -24,7 +24,7 @@ interface ExportModalProps {
   initialTab?: Tab;
 }
 
-type Tab = 'share' | 'diff' | 'notes';
+type Tab = 'share' | 'annotations' | 'notes';
 
 type SaveTarget = 'obsidian' | 'bear';
 type SaveStatus = 'idle' | 'saving' | 'success' | 'error';
@@ -34,7 +34,7 @@ export const ExportModal: React.FC<ExportModalProps> = ({
   onClose,
   shareUrl,
   shareUrlSize,
-  diffOutput,
+  annotationsOutput,
   annotationCount,
   taterSprite,
   sharingEnabled = true,
@@ -42,7 +42,7 @@ export const ExportModal: React.FC<ExportModalProps> = ({
   isApiMode = false,
   initialTab,
 }) => {
-  const defaultTab = initialTab || (sharingEnabled ? 'share' : 'diff');
+  const defaultTab = initialTab || (sharingEnabled ? 'share' : 'annotations');
   const [activeTab, setActiveTab] = useState<Tab>(defaultTab);
   const [copied, setCopied] = useState(false);
   const [saveStatus, setSaveStatus] = useState<Record<SaveTarget, SaveStatus>>({ obsidian: 'idle', bear: 'idle' });
@@ -51,7 +51,7 @@ export const ExportModal: React.FC<ExportModalProps> = ({
   // Reset tab when modal opens
   useEffect(() => {
     if (isOpen) {
-      setActiveTab(initialTab || (sharingEnabled ? 'share' : 'diff'));
+      setActiveTab(initialTab || (sharingEnabled ? 'share' : 'annotations'));
     }
   }, [isOpen, initialTab, sharingEnabled]);
 
@@ -82,9 +82,9 @@ export const ExportModal: React.FC<ExportModalProps> = ({
     }
   };
 
-  const handleCopyDiff = async () => {
+  const handleCopyAnnotations = async () => {
     try {
-      await navigator.clipboard.writeText(diffOutput);
+      await navigator.clipboard.writeText(annotationsOutput);
       setCopied(true);
       setTimeout(() => setCopied(false), 2000);
     } catch (e) {
@@ -92,12 +92,12 @@ export const ExportModal: React.FC<ExportModalProps> = ({
     }
   };
 
-  const handleDownloadDiff = () => {
-    const blob = new Blob([diffOutput], { type: 'text/plain' });
+  const handleDownloadAnnotations = () => {
+    const blob = new Blob([annotationsOutput], { type: 'text/plain' });
     const url = URL.createObjectURL(blob);
     const a = document.createElement('a');
     a.href = url;
-    a.download = 'annotations.diff';
+    a.download = 'annotations.md';
     a.click();
     URL.revokeObjectURL(url);
   };
@@ -198,14 +198,14 @@ export const ExportModal: React.FC<ExportModalProps> = ({
                 </button>
               )}
               <button
-                onClick={() => setActiveTab('diff')}
+                onClick={() => setActiveTab('annotations')}
                 className={`flex-1 px-3 py-1.5 text-xs font-medium rounded-md transition-colors ${
-                  activeTab === 'diff'
+                  activeTab === 'annotations'
                     ? 'bg-background text-foreground shadow-sm'
                     : 'text-muted-foreground hover:text-foreground'
                 }`}
               >
-                Raw Diff
+                Annotations
               </button>
               {showNotesTab && (
                 <button
@@ -372,25 +372,25 @@ export const ExportModal: React.FC<ExportModalProps> = ({
             </div>
           ) : (
             <pre className="bg-muted rounded-lg p-4 text-xs font-mono leading-relaxed overflow-x-auto whitespace-pre-wrap">
-              {diffOutput}
+              {annotationsOutput}
             </pre>
           )}
         </div>
 
-        {/* Footer actions - only show for Raw Diff tab */}
-        {activeTab === 'diff' && (
+        {/* Footer actions - only show for Annotations tab */}
+        {activeTab === 'annotations' && (
           <div className="p-4 border-t border-border flex justify-end gap-2">
             <button
-              onClick={handleCopyDiff}
+              onClick={handleCopyAnnotations}
               className="px-3 py-1.5 rounded-md text-xs font-medium bg-muted hover:bg-muted/80 transition-colors"
             >
               {copied ? 'Copied!' : 'Copy'}
             </button>
             <button
-              onClick={handleDownloadDiff}
+              onClick={handleDownloadAnnotations}
               className="px-3 py-1.5 rounded-md text-xs font-medium bg-primary text-primary-foreground hover:opacity-90 transition-opacity"
             >
-              Download .diff
+              Download Annotations
             </button>
           </div>
         )}
diff --git a/packages/ui/components/Settings.tsx b/packages/ui/components/Settings.tsx
index d88f394c..cc39e172 100644
--- a/packages/ui/components/Settings.tsx
+++ b/packages/ui/components/Settings.tsx
@@ -534,7 +534,7 @@ export const Settings: React.FC<SettingsProps> = ({ taterMode, onTaterModeChange
                         className="w-full px-3 py-2 bg-muted rounded-lg text-sm focus:outline-none focus:ring-1 focus:ring-primary/50 cursor-pointer"
                       >
                         <option value="ask">Ask each time</option>
-                        <option value="download">Download Diff</option>
+                        <option value="download">Download Annotations</option>
                         {obsidian.enabled && <option value="obsidian">Obsidian</option>}
                         {bear.enabled && <option value="bear">Bear</option>}
                       </select>
@@ -542,7 +542,7 @@ export const Settings: React.FC<SettingsProps> = ({ taterMode, onTaterModeChange
                         {defaultNotesApp === 'ask'
                           ? 'Opens Export dialog with Notes tab'
                           : defaultNotesApp === 'download'
-                            ? `${navigator.platform?.includes('Mac') ? 'Cmd' : 'Ctrl'}+S downloads the diff file`
+                            ? `${navigator.platform?.includes('Mac') ? 'Cmd' : 'Ctrl'}+S downloads the annotations file`
                             : `${navigator.platform?.includes('Mac') ? 'Cmd' : 'Ctrl'}+S saves directly to ${defaultNotesApp === 'obsidian' ? 'Obsidian' : 'Bear'}`}
                       </div>
                     </div>
diff --git a/packages/ui/utils/parser.ts b/packages/ui/utils/parser.ts
index 7e0b454a..f29e76c7 100644
--- a/packages/ui/utils/parser.ts
+++ b/packages/ui/utils/parser.ts
@@ -243,7 +243,7 @@ export const parseMarkdownToBlocks = (markdown: string): Block[] => {
   return blocks;
 };
 
-export const exportDiff = (blocks: Block[], annotations: any[], globalAttachments: ImageAttachment[] = []): string => {
+export const exportAnnotations = (blocks: Block[], annotations: any[], globalAttachments: ImageAttachment[] = []): string => {
   if (annotations.length === 0 && globalAttachments.length === 0) {
     return 'No changes detected.';
   }
diff --git a/tests/UI-TESTING-CHECKLIST.md b/tests/UI-TESTING-CHECKLIST.md
index e57e39c5..75f84eaf 100644
--- a/tests/UI-TESTING-CHECKLIST.md
+++ b/tests/UI-TESTING-CHECKLIST.md
@@ -103,7 +103,7 @@ The TOC sidebar provides navigation for long documents.
 
 **Export & Formatting:**
 
-- [ ] Export diff shows annotations in readable format
+- [ ] Export shows annotations in readable format
 - [ ] Format follows: "- **DELETION** (line X): [original text]"
 - [ ] Global comments appear at top of export
 - [ ] All annotation types exported correctly