I assume that diversity here means when you have rival cultures in proximity to each other you are actually at war all the time, and your people are fighting an

I assume that diversity here means when you have rival cultures in proximity to each other you are actually at war all the time, and your people are fighting and dying instead of growing in peace and property. You have to spend time making armies instead of houses. Having played a lot of Civ, I can only assume that's what he means.