Diamonds are vanilla items, dropped when Diamond Ore is mined. They can only be found at layer 1-16 in a map. They are considered extremely valuable as they have 1562 uses opposed to iron, which only has 251. Diamonds can also be obtained through MaceratingNether Diamond Ore. Doing this will give you 2 diamonds, as opposed to smelting it, which will only give one.
There is also a way to use Industrial Craft to make diamonds, using 64 coal, 8 flint and 1 Obsidian. However, as far as EMC goes, this is inefficient, as this would cost 8260 EMC when a diamond is only 8192 EMC.