With the Diamond Apple, you can customise your horse's coat. You can choose amongst various colours and marks, allowing your horse to have an uncommon coat. You can select up to three marks and place them as you like on your horse: more to the left, more to the right, higher or lower, it's up to you to decide. Beware, the horses that wear a Golden Apple can benefit from the Diamond Apple but in that case they loose their Golden Apple coat. Also note that this bonus item can only be used on horses over the age of 3.
Howrse removed them from the game because people were having "technical" problems when trying to create the coats, saying that the feature isn't supported by most internet browsers which pretty much sucks.
Now they are quite rare and so they are also quite expensive. Most of the time they are sold for 500k - 1,000,000 Equus + 10-30 passes..