Diffuse reflection is the scattering of light that occurs when it reflects off a surface. Unlike specular reflection, which is calculated based on the surface angle, diffuse reflection is calculated based on the structure of the surface itself. For instance, a rough surface will reflect light at many angles, depending on its bumps, divots, and grain. Even a very smooth surface will produce diffuse reflection at many angles, due to the molecular structure of the material.
In ray tracing
In CGI, diffuse reflection can be calculated by a ray tracer to enhance the photorealism of a rendered image. Instead of reflecting the light (specular reflection), the ray tracer takes samples of multiple diffuse reflection angles. This process increases the time and processing power required to render the image, but produces better results.
Interreflection (or diffuse interreflection) is the illumination of nearby objects, or parts of the same object, caused by their mutual diffuse reflection.