It's good to know where the diameter of a circular object is if you have to split a cookie between two 5-year-old kids. Think of a round chocolate chip cookie. The diameter of the cookie is a line that divides the cookie into two equal halves, through the center of the cookie.
The diameter of a circle or sphere is a line that passes through the center and starts and ends and two opposite points on its perimeter or edge. The diameter is also the length of that line. In math class, teachers often ask you to use the diameter of a circle to find its area. This is a good skill to have if you are trying to figure out whether the 14 inch or 16 inch pizza is a better deal.