Diamonds solve these problems:
- The maximum size a smart contract can be on Ethereum is 24kb. But sometimes larger smart contracts are needed or desired. Diamonds solve that problem.
- Provides a structure to systematically and logically organize and extend larger smart contract systems so they don't turn into a spaghetti code mess.
- Provides fine-grained upgrades. Other upgrade approaches require replacing functionality in bulk. With a diamond you can add, replace, or remove just the functionality that needs to be added, replaced or removed without affecting or touching other smart contract functionality.
- Provides a single address for a lot of smart contract functionality. This makes integration with smart contracts and user interfaces and other software easier.
If you plan to build a system that can grow or change over time then a diamond is a good choice because it enables a system to grow in a systematic, organized way.
The standard for diamonds is here: https://eips.ethereum.org/EIPS/eip-2535