Diamond blades don't cut they grind! The exposed diamond crystals do the grinding work. The metal matrix or bond holds
the diamonds in place. Trailing behind each exposed diamond is a "bond tail" which helps to support the diamond. As the blade rotates through the material the exposed surface diamonds grind 

After several thousand passes through the material being cut the exposed diamonds begin to crack and fracture. The matrix holding the diamond also begins to wear away.  

Eventually the diamond completely breaks up and it's fragments are swept away with the material that it is grinding 

As the old diamonds are worn down they are replaced by new ones and the process continues until the blade is worn out.