The Diffuse Filter Render Element shows the colors and textures used in materials, flatly applied to objects with no lighting information. The colors are the actual colors set in the material definition, and each texture appears as it does in the texture (file) itself. There are no highlights or shadows, and any background image is not included.
Other render elements that include colors from materials are said to include the diffuse contribution or the diffuse component of the rendered scene. The Diffuse Render Element contributes this diffuse component; any render element that includes this diffuse component is a combination of V-Ray Diffuse and other render element(s).
This render element is, by itself, useful for making overall adjustments and enhancements to colors and textures during compositing.