Maintaining a big, binary blob will make the git history grow in proportion to the size of the binary blob, not the size of the logical/abstract diff, regardless of how comprehensible the diff looks.

To minimize the disk space to only the changes, you want to store the changes and not the complete, binary before/after images. By filtering, you reduce the stored object to the difference.

You won't be storing the sqlite file in git. So you won't be storing indexes or un-vacuumed data in git. You also won't be storing a database with some of it's rows locked or anything like that.

Git will be able to compress the text better, and compress between versions better.

Merging and resolving conflicts would have a chance of working.