The diameter of a tree is the length of the longest path between any two nodes. Not the longest path from the root (that is height), but the longest path anywhere in the tree.
Example: If your tree has nodes A-B-C-D-E in a line, the diameter is (the path from A to E). If you add a branch, the diameter might change.
A long skinny tree has high diameter. A bushy tree might have lower diameter despite having more nodes.