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The guy in the fleamarket town, in the gated house... place, whatever, next to the market. He has a green npc icon over his head. You can trade in diamonds for "loot boxes" which have random rewards. Sometimes it's worth it, sometimes it's not. It's been more worth it with my experience so far. You can also get the item needed for Larry out of them
Rewards can vary, another diamond, gun mod parts, skill magazines, a dead cat... you know, normal things
Flea market - one guy takes little diamonds in return for loot boxes but there is a limit. He is in the house in the corner and it is a conversation thing not a direct purchase off the table.
The preacher in the church to the West also buys and sells them. You get faction for each purchase and sale.
I do not recall any other use for them but as there is undoubtably something I have overlooked I would say stash 10 little diamonds and one of each of the cases and big diamonds somewhere and sell any others. I ended one game with so many in my stash and 5M in cash even without selling them.
You can open up the menu where you start the extend merc contracts process and sell all valuables there but I DO NOT recommend using it as it can and will sell ALL valuables and there is at least one quest item that is both and will be sold. The museum statues and valuables I guess probably go too and they have a use in game so for safety sake I would never use that button.
Yep little diamonds are useful for trading all kinds of things.