A diode is formed by joining two equivalently doped P-Type and N-Type semiconductor. When they are joined an interesting phenomenon takes place. The P-Type semiconductor has excess holes and is of positive charge. The N-Type semiconductor has excess electrons. At the point of contact of the P-Type and N-Type regions, the holes in the P-Type attract electrons in the N-Type material. Hence the electron diffuses and occupies the holes in the P-Type material. Causing a small region of the N-type near the junction to lose electrons and behave like intrinsic semiconductor material, in the P-type a small region gets filled up by holes and behaves like a intrinsic semiconductor.
This thin intrinsic region is called depletion layer, since its depleted of charge (see diagram above) and hence offers high resistance. Its this depletion region that prevents the further diffusion of majority carriers. In physical terms the size of the depletion layer is very thin.
Diode Biased VoltageEdit
When a diode is zero biased, that is has no bias, it just stays. Almost no current passes through the diode. However if you connect the anode and cathode of the diode you might be able to observe small voltage or current that is insignificant. This is because the electromagnetic spectrum that's present in our environment by default (microwave background, heat, light, radio waves) knocks off electrons in the semiconductor lattice that constitutes current. For practical reasons this current can be considered zero.
In reverse bias the P-type region is connected to negative voltage and N-type is connected to positive terminal as shown above. In this condition the holes in P-type gets filled by electrons from the battery / cell (in other words the holes get sucked out of the diode). The electrons in N-type material is sucked out of the diode by the positive terminal of the battery. So the diode gets depleted of charge. So initially the depletion layer widens (see image above) and it occupies the entire diode. The resistance offered by the diode is very huge. The current that flows in reverse bias is only due to minority charge which is in nano amperes in silicon and micro amperes in high power silicon and germanium diodes.
In forward bias the P-Region of the diode is connected with the positive terminal of the battery and N-region is connected with the negative region. During the forward bias the following process occurs. The positive of the battery pumps more holes into the P-region of the diode. The negative terminal pumps electrons into the N-region. The excess of charge in P and N region will apply pressure on the depletion region and will make it shrink. As the voltage increases the depletion layer will become thinner and thinner and hence diode will offer lesser and lesser resistance. Since the resistance decreases the current will increase (though not proportional) to the voltage.
At one particular voltage level Vf called the threshold / firing / cut-off voltage the depletion layer disappears (overwhelmed by the charge) and hence from this point on the diode starts to conduct very easily. From this point on the diode current increases exponentially to the voltage applied.