Bagheera

I'm still a bit confused as to what type of contact gets a diamond. Is it a fellow squaddie simply making fire contact with an enemy, or is it through the "spotted" command? I know when I use the "spotted" command (and I use it more often than anybody, on most servers) I get the red infantry dot, sniper marker, or vehicle marker, but no diamond. However, does that mean my squad buddies get the diamond AND the marker?

Tarenth

Its somewhat confusing really.

Grey diamonds are from the pulse scanner. If you're scanned you'll have a grey diamond on you and if you scan someone with it they'll have the diamond.

Red diamonds are netbat information. Spotted, otus, recon netbat, and support netbat relay red diamonds to everyone in your squad. Spotted relay netbat infromation to everyone on your team.

Recon netbat will give you a moving red diamond as part of its extended spotted feature.
Support netbat will give you a moving red diamond on recons who use camo.

The assault and engineer netbat will give you kit, health, armor type, and armor health in addition to the red diamond, but only if they're in range to see the enemy and send you that information.

Basically the pulse scanner gives you grey diamonds.
Any spotting tool gives you red diamonds
Assaults in range will turn that red diamond into a kit/health bar.
Engineers in range will turn that red diamond into an armor/health bar.

__________________
My sanity is not in question...
It was a confirmed casualty some time ago.

Razcsak

And a sniper in the squad lengthens the time that netbat contacts remain updated. Even without spotting tools, a soldier can be placed on netbat if an opponent has them in their crosshairs for long enough. For this reason, even if you're not firing at someone (for range, say, or to avoid drawing attention), holding them in your sights can help.

At least, that's how I remember it working a while ago.