The diamond is indeed the "diamond" shaped part in the middle of the double cross over, above. While not always diamond shaped (tracks at 90* to each other make a square), the function is always to allow one set of tracks to cross another.
They are a "problem" for the railroads in that they take a lot of pounding from the trains. Since there are gaps to cross (the flangeways from the other set of tracks) the wheels drop ever so slightly, pounding the end of the rail, deforming it, and weakening along any welded joints. Eventually, they need replacing.
Since the real railroads have a lot of room (most places) they tend to avoid them, as noted above. In (passenger) yards, trains are travelling much slower so the wear is not so bad. They will still be found where different RRs have to cross each other. Who does the maintenance there is subject to agreement between the roads in question.
Andrew