On the whole, the AGS (American Gem Society) diamond grading scale is easy to remember. All you have to do is keep track of the 4 C's. Cut, Color, Clarity and Carat Weight. The first three need to be as low as possible, preferably all zeros, while the last needs to be as high as you can afford. Here's a quick breakdown:
Graded from 0-10 where 0 is the Ideal cut through 10 which is a Poor, having a diamond cut perfectly by the cutter is preferred. While having a 1 or even a 2 as a grade isn't ideal, the flaws may be undetectable to the naked eye.
Also graded 0 for completely colorless through 10 which has either a light yellow or light brown tint, the lower the number, the clearer it is. For a diamond, totally colorless are the rarest which makes them the most valuable. However, colored diamonds, while less valuable, are also quite popular. Fancy Yellows, Pinks, Blues, Browns (Chocolates) and Black diamonds all enjoy a great deal of popularity.
For a diamond to have a 0 on the clarity scale, there should be no blemishes (called inclusions) inside the diamond. A 0 is a flawless diamond where a 10 on the scale will have obvious inclusions. Many diamonds may have slight inclusions, but, unless viewed under a magnifier, those inclusions are virtually undetectable.
Diamond are weighed on the gram scale with a 1 carat diamond weigh 1/5th of a gram. This is broken down into points, where a carat equals 100 points, so a 1/2 carat diamond will weigh 50 points.
This means when you go into a jewelry store or shop for loose diamond and ask about the grade of the diamond, the best answers you're looking for are 0/0/0/1.000 which means perfectly cut, perfectly clear, no blemishes and weighs one carat. However, diamonds with minute imperfections which rate a 1 or even a 2 on scales may look perfect and will be significantly less expensive. Also, colored stones such as the Chocolate or Fancy Yellow may score high on the color scale but have their own charm.