What does diversification actually protect against?

Detailed Explanation

Concentration risk — the chance that one company, one sector or one country determines your outcome. Spreading exposure across asset classes smooths performance because the components do not move together at the same time or to the same degree. That reduces the depth of the worst outcomes and makes the path easier to stay invested through. What it does not do is remove market risk. In a broad downturn most things fall together, and diversification limits the damage rather than preventing it. Expecting more than that from it is how people conclude it "failed".