Embedding in armiesTo be able to embed diplo units in your army, you need to research Diplomatic Contingent, which is in the diplomacy tree. After that, you can add diplos to your army in the window where you populate the army with troops.
What's the point?
1. You can reinforce your alliance mate or a confederate city with this army against other players' diplo attacks.
2. By embedding scouts in an occupying army you are adding scout defense to that army in field. If several armies are stacked on a square with a good amount of scouts in each, their diplomatic defenses add up and they become rather difficult to scout. Note that assassins don't work on armies in field, only in cities, so there's no point in embedding assassins.
3. By embedding diplos in armies, you are creating a small bubble of diplo visibility around them. Remember the table in my last post? The "visibility" property is what accounts for that radius. Only scouts and spies have it, and human and dwarf ones have the larges sight radius of 4 squares. If another army lands on a square next to yours you will be able to tell whether it's a pack or a cornucopia.
Tracking other diplo unitsSometimes, when you get attacked with diplos, you want to try to figure out where the attack came from. The technique has been described in this forum thread. The basic principle is following the enemy units with your own and taking screenshots as they progress.
This is especially handy in a peaceful situation. Chances are, the attack was sent by someone from not too far, and if you happened to be there when their units landed you can send out your diplos to trace their trajectory.
Visibility radiusIf you go to the map and turn on diplomatic visibility you will see how far you can see from each town.
In this radius, you can see how big is an NPC pack or an occupying army stationed next to you. Any moving diplomatic unit that's not your own (with exception of settlers, exodusing cities, and messengers, which are always visible to everyone) will be visible to you only within this radius.
You can increase your visibility radius in three ways: by leveling up the consulate, building a foreign office, and doing diplomacy quests and making the inquisitive populace discovery. If your cities are clustered closely together, a foreign office in just one city will boost it enough to see around as far as 100 squares and even more. The inquisitive populace discovery adds 2 squares to your city visibility radius.
Diplomatic upkeep buildingsIn the previous post I discussed what types of units to build in bulk and what kinds in relatively small batches. Upkeep reducers are only useful if you intend to consistently keep a high number of a certain type of unit in the city, since these buildings are specialized to each unit type (thieves' den, scouts' lookout, assassins' abode, spies hideout, and saboteurs' sanctuary).
Diplo upkeep buildings consume a lot of basic resources, which you will need every scrap of for building troops, so choose wisely. The best use case for these buildings is making cities that specialize exclusively in diplomatic units.
Specialized diplo cities
Given the realities of war, it behooves a military alliance to have cities that are dedicated to diplo. A case can be made for scout and thief cities in particular. Other types of diplomats usually don’t really need a dedicated city, although the upkeep on assassins and saboteurs is high enough to separate packs of these units to different cities.
For building a thief city, one can choose a high food plot city over a military style 5- or 6-food plot one (but still surrounded by plains). Unlike combat troops that are built to die and immediately rebuilt, thieves are supposed to be reusable, and long-term upkeep is more important than the speed of building. A city spot surrounded by high food plots can make a choice thief city. Sov is rotated to diplo production during the build phase and then turned to food for high gold upkeep.
You will have to carefully pick a land plot to put such a city on, due to high resource consumption of upkeep buildings.
Table 1. Resource cost for diplomatic buildings (per hour, for a level 20 building)