Joe Caiati has a good primer on what diagnostics and usage data mean in iOS, what you can do, and when it's probably time to book an appointment at the Genius Bar:
I would liken the Diagnostics & Usage Data section to the Console on the Mac. There is a lot of noise in there, but sometimes you can find important information about issues related to your device. At its most basic definition, the Diagnostics & Usage Data section is a log of system events that happen on your iOS device. This log isn’t tracking your every move, but it is creating entries whenever events like an app crash happens.
Like the Console, unless you are an engineer at Apple, you probably won’t know what every string of text means, but I’d like to think I know enough to help you figure out what’s important. If you are interested in what’s going on in your iOS device, navigate to the section and let’s dig in.