The diameter of a binary tree is defined as the longest path between any two nodes, measured by the number of edges. This path doesn't necessarily need to pass through the root.
To effectively compute the diameter, one must consider the height of left and right subtrees from every node. The maximum diameter is updated when the sum of these heights at any node exceeds the current maximum.
The provided JavaScript implementation calculates the diameter by recursively determining the height of each node while concurrently keeping track of the maximum diameter found.
The test cases demonstrate the functionality of the algorithm: for instance, a tree with nodes 1-2-3 would yield a diameter of 3.
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