That’s pretty much right.
Diffusion, kind of emulates what happens to the higher frequencies in reverberent spaces, where they lose energy and coherence as they bounce off surfaces, and get absorbed.
Diffusion is normally a part of the late stages of a reverb.
Generally reverbs get modelled like this.
Lets try to accurately model sound behaviour and reflections just after the sound is made. Phew, that was tricky, but I got pretty good results.
OK – lets try to accurately model the sound and reflections of reflections for a bit longer. Ooooo, this is getting hard and it hurts my head, and I’ve suddenly run out of processing power.
OK – lets instead try to blur everything together and get it to kinda do the same thing that real spaces do by using some fancy maths like allpass filters and random delay stuff – Diffusion falls into this category. It’s a part of the late reverb model. Generally the more diffusion and smaller size will make the late reverb denser and more smeary. Larger size and less diffusion will allow better definition of the sound in late reverb.