Hi Natasha,
Fantastic question.
Diminished is a fascinating subject… one that I have recently been exploring and playing around with and I look forward to sharing some of my discoveries.
The Symmetry Of The Diminished Scale
The diminished scale is ‘symmetrical’ which means that it has a repeating interval pattern that takes you back to where you started.
It’s almost mathematical how it slices up the 12 notes of the piano and always takes you back to the note you started on without changing the alternating interval structure of half and whole steps.
If you start on any note of the piano, and play alternating half/whole steps, there are only 3 possible diminished scales.
Now, each of those 3 diminished scales is related to 4 keys.
Play alternating half/whole steps from C, and you will get back to C. This could be played over C7 to give you a dominant flavour (3 and b7) and also b9, #9, #11, & 13 alterations/extensions.
This exact same scale is the same for Eb, Gb, & A - start on each of those notes, and play alternating half/whole steps, and you will see that you are playing the exact same scale, but starting and ending on a different note in the scale
If you play the exact same scale over C7, Eb7, Gb7 and A7, you will notice that it gives you 3 and b7, and also b9, #9, #11, & 13 alterations/extensions for all of these chords.
The same applies to the other groups:
First, I’d recommend you learn these groups, so that you can see the relationship described above, which is 1 diminished scale serving 4 keys. So 3 diminished scales serve all 12 keys.
That is the first step for you.
Completely Different to Modes
From now on, look at the diminished scale as a different entity to the scales you are familiar with, such as major scales, and minor scales.
The diminished scale is its own thing. A completely different animal if you like 
And you can superimpose it in many different settings, over lots of different types of chords, always related through the groups highlighted above.
A Nice Analogy - The Human Body
I like how Tuomo referred to it in one of his Masterclass lessons. He said something along the lines of
“diminished is a spine to all harmonic movement”
Let’s continue with this analogy of a body…
Imagine that the major scales are the hands, and the major modes are the fingers.
Imagine that the minor scales are the feet, and the minor modes are the toes.
and then imagine the diminished scale is a deeper, visceral, more integral part of the body system - the spine - which links everything together.
It’s a different system, but still interrelated into all other aspects of harmony.
Does this help? my analogy is a little ‘out there’
, but I think that’s a nice way to illustrate where it comes from, what it’s role is, and how it is related to what you already know.
I didn’t want to scare you away with a lot of theory, or application examples, because it’s really hard to explain this clearly without it being overwhelming, particularly in this format. But hopefully you now have a rough idea of what you are dealing with.
I’m still working out the best way to present and teach this, and your question has got my creative juices flowing… so thanks!
I’d also like a dedicated section of the website on diminished, perhaps incorporating the views and insights of all our teachers, all in one place.
More to come…