Diffusion refers to the degree to which sound waves spread out evenly in a space. The more diffuse, the better. Simply put, if sound waves are spread evenly, what you hear on the left side of the room should be the same someone else hears on the right side of the room at the same moment.
Diffusers radiate sound in multiple directions, leading to a “live” sounding space. That has a keen advantage over reflective surfaces (which push the sound in just one direction) or absorbent materials (which dampen the sound energy in a space). Diffusers are used in conjunction with absorbent materials to control reverberation.
Used extensively in theaters and auditoriums, this can help to assure there is not a bad seat in the house. Designing diffusion properly can be a tricky undertaking and is best left to acousticians who specialize in theater acoustics. We can refer you to these professionals.