Diamond Ore is found within Diamond Nodes embedded in rocks underground mainly in the Lava layer underground. Diamond Nodes are extremely rarely accessibly through caves, so you will need to dig mineshafts yourself to find your first batch of Diamond Nodes.
Diamond Ore - like all ores - cannot be pulled from Nodes with your arctek-gauntlet nor any Power Cells equipped, it requires an Extractor of any kind to be harvested from Diamond Nodes.
- Basic Extractors will extract 3 Diamond Ore from 1 Diamond Node within 10 minutes
- Advanced Extractors will extract 6 Diamond Ore from 1 Diamond Node in 5 minutes
- Super Extractors will extract 9 Diamond Ore from 1 Diamond Node in 3 minutes
Diamond Ore itself is currently (R25 in November 2015) not useable for crafting; instead it has to be smelted to bars first. Ore / Nodes cannot be pulled/taken nor placed.
Diamond in its processed form is needed to make Diamond Mining Cells and Lumite Mining Cells, Diamond armor and Lumite armor, Diamond Swords and Lumite Swords, Advanced Excavators, Super Excavators and other useful items.
Template worlds RW1-4 are said to feature a smaller number of all Ore Nodes than RW5-8, however this seems not to be the case for Diamond Nodes. You can find Diamond Nodes on RW1-4 worlds on the deeper layers of the Stalactite layer underground, throughout the whole Lava layer and even all over the Corruption layer too, while in RW5-8 worlds Diamond Nodes seemingly extend solely over the Lava layer.
For explanations about template worlds go to the official forums: http://steamcommunity.com/sharedfiles/filedetails/?id=634088783