Question

In forward biasing, diffusion of electrons and holes into depletion layer decreases its width. What is diffusion in this case?

Answer 1

Diffusion means the flow of charge carriers.
In forward bias electrons from charge carriers flows from depletion region toward the positive terminal of the battery and holes towards the negative terminal of the battery.
So due to the flow or diffusion of the charge carriers , width of the depletion region decreases.