It means “dispersion” or “scattering” and refers to Jews outside Israel. The Diaspora originated when the Assyrians and Babylonians deported the Israelites (related in 2 Kings 17 and 25). Ezra and Nehemiah tell of the return of the Jews from exile—but not all chose to return.
Some stayed in Babylon, and by the New Testament period Jews lived in many parts of the Roman Empire, with their religious life centered around synagogues (see 132). When possible they made trips to their spiritual homeland, Jerusalem.
The significance of the Diaspora for Christianity is that as the new faith spread, its missionaries (most of whom were Jews) used the synagogues across the Roman Empire as their first points of contact (a logical thing, since they were preaching the Messiah the Jews had awaited).
Diaspora Jews were already proof that the Old Testament faith had moved beyond Israel.