I refuse to repeat the documentation until you have at least tried to read it. That is why it is there and it is faster for both of us if you take advantage of it.

As for your additional question, the -n option is an implicit loop over the lines in both files. If you want to do words, then within each line you would need to loop over the words as well. But the same logic would work. (OTOH the algorithm will get rather inefficient. But oh well.)