There's a solid Diddy player in my region who just won our last local and I've played him pretty extensively. It's a rough match-up, you have to put in quite a bit more work and play really safe a lot of the time. You need to be really careful about air-dodging after being thrown or hit upwards, especially when thrown upwards at high percent. Diddy's follow-ups are guaranteed at low percents but at kill percent they're not, so instead he can bait an air dodge and then Uair for the KO, as seen on Ryuga's first stock game 1. You can't challenge his Uair with your Dair though so just maneuver around it and get back to neutral.
If you get him off-stage try to read the side-B recovery, it's pretty easy to smack him out of it with a Fair, Bair or even Ftilt if you know it's coming or can bait it by running towards the ledge and then retreating. Throwing out Nairs to bait approaches or to pressure isn't as safe in this match-up as many others, I've found just staying grounded and tossing out an occasional Jab 1 or empty jump to be less punishable, plus staying grounded allows you to pivot grab rolls behind you.
Most important imo is to try and keep him above you once you have him in the air or on platforms, it's tricky because of his movement speed but his options for attacking downwards in the air are much more limited than everything else he has. Put the fear in him with a Uair and then empty jump next time to bait an air dodge into the stage, free punish.
