TLDR it's a Debian/Linux image that comes preconfigured for raspberry pis and other small single board computers.

Firstly, it's quite minimal for a "full featured" Linux distro, reducing RAM and CPU usage which are usually in high demand on SBCs. But it also doesn't remove stuff that a typical linux user needs, so no weird configuration to get your regular suite of apps running.

Secondly, it has a library of utilities for managing your computer from the command line. Such as common raspberry pi configuration, setting up and managing cron jobs, services, DDNS, VPNs, disks, etc.

Thirdly, it has its own "repository" of applications, which are really just regular Debian packages but with extra scripts to configure said software for the typical user. Stuff like, installing and configuring a database, webserver, python, php are all done alongside your software setup, and it "just works".

It's usually used for hosting services like Plex, Jellyfin, Nextcloud, and other utilities with minimal effort but it's really just like any other Linux and you can do whatever you like to it.

dietpi.com if you wanna read about it from the devs