Stock lead is huge in this matchup because if you manage to survive to percents where Diddy can't combo you with D-throw U-air, the matchup actually becomes significantly easier, and with Rage, Mario can easily start up more frame tight combo strings to secure a bigger lead.
That being said, Diddy has dumb tilts, generally huge damage from all his throws, a 6 frame F-air that does 12%, and his killer 3 frame U-air (which does have the ability to interrupt Mario's low% strings). He also benefits from the usual item toss related shenanigans and Bananas being strong trapping tools, but everyone already knew that.
Make sure to N-air him out of his Up-B if you have the chance for easy gimps.