*poof* You called?
Let's get one thing straight. Diffusers do not make the light soft, they just scatter it everywhere. The idea is the light scatters to a large surface, which in turn becomes the actual "diffuse" light source.
I've seen way too many people in open spaces popping up diffusers because they thought it would make the light softer, whilst in fact it only reduces your light output.
As far as diffuse light goes. When we say "diffuse light", we mean soft light. Soft light is achieved by having a light source that is large in relationship to the subject. the sun is very large, but, because it is so faraway, it becomes a tiny lightsource. I have 2 softboxes, an umbrella and a reflector to create soft light.
So how to get soft light in practice? Look around!
See a white wall? Light it and place your subject near it. The closer they are, the softer the light.
If you have a white ceiling, use the diffuser. Ceiling only light will create an ugly shadow under the eyes, and that's where the diffuser kicks in. Say, the ceiling is our main light source, creating a shadow under the eyes. The diffuser itself also emits light, which fills in the shadow on your models face. Yes, the light is a bit harder in that shadow, but is generally not noticable.
So how to do a real studio shoot, on the cheap, with one flash, on-camera? Simply find something to become your light source. Fire a test shot, see where the shadows are. Then compensate for those shadows by bouncing some light in there. For example, use the ceiling, and pop on the diffuser to fill in those shadows a bit. Bonus points for ditching the diffuser and popping a white piece of cardboard under the models chin (larger light source).
finally: light picks up the colour of what it hits. If you bounce from a blue wall, your model will become a smurf.
Happy new year