There are basically no levels without diamond prize blocks.
When the P-block is knocked open, the diamond will fall down out of it and land on the ground below. It needs to be picked up by the player, and you must wait for it to fly to the diamond counter, in order for it to be an "official collection". If it is not picked up within a few seconds, it will begin to blink and then disappear. The player can hold up to 99 diamonds, after which any diamonds picked up will simply fall off the screen. The player must use a Diamond power to pick up any more.
The diamonds have different colors depending on the theme of the level, but all work identically.
For more general discussion about diamond economy and diamond powers, see the article Diamond power.
10 Diamonds
The 10 Diamonds prize is almost identical to the diamond, except that you get ten diamonds added to the counter instead of one.
Upon opening a Prize block that contains this prize, ten small diamonds will come out and form the number "10". After a few moments, the diamonds will be added to the counter automatically, meaning the player does not need to pick up the prize, but just hit the block. If you die before some of the diamonds reach the counter, the ones that didn't make it will not count.
Like Ankhs, Coins, and the 10000 points prizes, the 10 diamonds prize will not appear twice from the same block. The moment the prize block is hit, the game will automatically set it to a diamond for your next try, regardless of whether the prize was collected or not.
Trivia
When at 99 diamonds, the diamonds from a 10 diamonds prize will still fly into but not increment the counter.
You may have noticed that the spinning animation of diamonds in the Cave and Mountain themes looks a little strange. This is because their palette mimics the colors of the water or lava in their respective theme. Such liquid tiles are actually just static images with rapidly changing colors to give the illusion of fluid motion. So, in addition to the diamonds spinning, their color also changes in sync with the water or lava in the level, resulting in the sort of erratic flashing animation that you see.
The image to the right appeared in Issue 7 of Sega Visions magazine (Late 1991 prototype). If you look at the upper right-hand corner of the screen, you will notice that both the diamond and the "x" on the diamond counter are slightly larger than how they appear in the final version of the game.
