There is not need to learn another version of Markdown, the diagrams are just plain ASCII and Markdeep supports the Markdown you know and love, plus more.
I think it is great, I love it!
(And frankly, the diff thing is nonsense, too. Diff produces an unreadable mess on ASCII art. I'd rather see the diff of some XML that shows me nodes added, removed, properties changed.)
You need a better editor, that's all. Emacs has picture-mode and artist-mode; no doubt vim has something too, although a quick search didn't help.
There is lots of prior art extracting diagrams from textual drawing but AFAIK all required global conformance to some accepted "syntax". Markdeep's(?) idea of local beautification while maintaining the global fixed-width layout is brilliant as you're not limited to particular structures and anything unsupported degrades gracefully! (If this idea has no name, let's call it "2D ligatures"?)
We could have a dozen different tools based on this idea, each supporting a somewhat different dialect, yet any diagram will be reasonably readable under any of them — which is exactly the quality you want when excavating a 40-year-old README of unknown origin.
It's the simplest thing that could possibly work. Except one: using line drawing characters directly in the source (and requiring no tool at all, just view in fixed-width font). Let's try:
* . *
* 0 3 P ● Eye ╱ ▶ ╱ *
* ●───────● +y ╲ 〈) ╲ ╱ Reflection *
* 1 ╱│ 2 ╱│ ▲ ╲ ╲ ╲ ▶ *
* ●───────● │ │ v0 ╲ v3 ────────●──────── *
* │ │4 │ │7 │ ●────╲─────● *
* │ ●─────│─● +─────▶ +x ╱ ◀ X ╲ ◜⎺◝◀──────── ○ *
* │╱ │╱ ╱ ╱ ○ ╲ ( ╱ ) Refraction ╱ ╲ *
* ●───────● ▶ ╱ ╲ ◟⎽◞ ╱ ╲ *
* 5 6 +z v1 ●──────────────────● v2 │ ○─────○ *
* ▼ *
Hmm, not as good but mostly OK (though font dependent), except for circles. Disappointingly I found no matching parts for bigger than 2x2 circle. It's easy (technically, not sure about politically) to add a few more but it's impossible to support smooth circles of arbitrary radiuses. (OTOH, neither does Markdeep.)
Perhaps the best of both worlds would be writing unicode (perhaps using some ascii->unicode helper at typing time) and further enhancing it with this kind of tool...2. Version control for binaries sucks.
3. Graphical tools can be very awkward when aligning stuff. MS Word, for example, is a pain for making diagrams in.
There are literally dozens of examples of text-based markup tools that are cross-platform, version-controllable, and can be rendered in a terminal if you're into that, and which don't require me to waste time drawing ridiculous ASCII art borders to denote logical relations.