XSLT 2.0 and XPath 2.0 Programmer's Reference, 4th Edition (424 page)

$chapters//diagram[1]
means
$chapters/descendant-or-self::node()/child::diagram[1]
, that is, every

element that is the first

child of its parent element and that is a descendant of a node in
$chapters
.

$chapters/descendant::diagram[1]
means the first

element (taking them in document order) that is a descendant of a node in
$chapters
. Another way of writing this is
($chapters//diagram)[1]
.