Diode lasers have much higher divergence and lower output than the CO2 lasers we usually see in cutting machines. To compensate, we must mount the diode very close to the work. Luckily a laser diode is small enough that won't be a problem.
Why not use a CO2 laser then? CO2 lasers have problems of their own. They are bulky, require high voltage and a water cooling loop. Water and electricity are mixing very close together. They are also thin glass and very fragile. Many do not survive a trip through the mail system. Internal misalignment and power fade are also very common. So why are we still using them? It comes down to power density, absorption, and beam quality. CO2 is still the cheapest solution for laser metal cutting.
But for a hobbyist interested in etching and light cutting of thin materials (not metals unless very thin), diode lasers still have an advantage.