(© Ian Plant) Without getting deep into the science of optics or physics (frankly, I don’t understand either), diffraction is basically a reduction in lens resolution that occurs when you use small apertures, for example f/16 or f/22. Is this something you should be concerned about?
In a nutshell, the answer is both yes and no, but mostly no. If you can avoid small apertures, you should do so to optimize image quality. On the other hand, loss of sharpness due to diffraction is typically not very significant, and since there are many good reasons why you may wish to use small apertures, diffraction shouldn’t be high on your worry list.
Small apertures may be necessary if you want to make certain types of images. For example, when incorporating the sun into your images, small apertures such as f/16 or f/22 are necessary to get the most attractive sun stars. Small apertures may also be useful for achieving long exposures that result in motion blur, although neutral density filters can be used as well. By far the most common reason for using small apertures is to get sufficient depth-of-field in order to achieve near-to-far sharpness. The photo posted below is a perfect example. I was literally inches away from the foreground branch with a wide angle lens. In order to ensure sharp focus from my foreground to my background, I needed to stop down to f/16. Although I lose a bit of overall image sharpness to diffraction at this aperture, the lack of sharpness that would have resulted from insufficient depth-of-field would have been much worse. I’ll trade diffraction for depth-of-field any day.
The bottom line is that in most instances, diffraction will result in an acceptable loss of image quality, one that can be more or less corrected by a little extra sharpening when preparing the image for printing. You might not be able to create a 40”x60” print from a diffraction limited digital file and expect to see lots of fine detail (then again, I've made some big prints from images taken at small apertures that look incredible in terms of sharpness and detail), but for most uses you likely won’t even notice. The bottom line is that although you should avoid small apertures when possible, never let concerns about diffraction get in the way of your artistic vision.