Diamond does not propose any novel thesis about this extinction. Instead, he simply argues that the disappearance of these large animals (which were all marsupials) was due to human action.
The main cause of the disappearance of these animals was the coming of human hunter-gatherers to New Guinea. This happened around 40,000 years ago. Diamond aruges that the megafauna of New Guinea had evolved in an environment that was without any human beings. Therefore, they were not well adapted for surviving once human beings came to New Guinea. Diamond (p. 42 in my copy of the book) calls them "incurably tame."
So, Diamond argues that these large animals disappeared because they were unafraid of people and were therefore killed when people came to New Guinea.
Diamond believes that the mega-fauna in Australia/New Guinea disappeared due to being too tame when the humans came, because they had no reason to recognize them as a threat, which they turned out to be.