Diamond Walls are the strongest wall in the game, made from 2 diamonds. They're costly, yet useful blocks for making shelters that can withstand attacks from dragons. Despite their great strength, players generally prefer to use them as decor instead to show off the wealth of their world.
It's generally recommended to use Diamond Walls to defeat the Undead Dragon, building a large tower with two layers, one for taking cover and the other as a firing platform. They cannot be destroyed by fireballs from any dragon, however, zombies can still spawn on them.
On the Steam version of CastleMiner Z, Diamond Walls (and the other material variants of walls) have an updated texture. Nothing else is changed aside from this.