The main purpose of diffusion is to spread light out to cover a wider area, such as providing coverage for a wide angle lens. And depending on the environment (a small room with white walls and ceiling versus a cavernous studio) it will also affect the contrast of a scene. If the diffusion is the same size as the light source it is covering it does NOT soften the light. Quality of light (hard or soft) is determined by the size of the light as seen by the subject. That is the transfer edge of the shadow where things go from highlight to shadow–an abrupt edge means a hard light, a long transition means a soft light.