To Diamond, the significance of this disk is that it shows that technology does not come about in the way that most people think. This is important to his overall argument.
To most people, “necessity is the mother of invention.” In other words, inventors see a need and then invent something to fill that need. People often think that societies that did not invent many things must be made up of people who are not smart enough or motivated enough to invent technology to fill needs. Diamond argues that the Phaistos disk helps to disprove this idea.
According to Diamond, the Phaistos disk was not adopted widely because of a number of factors that can be found on pages 259 and 260 in the paperback edition of the book. In general, these factors have to do with the fact that the Phaistos disk could not be combined with other innovations to make printing easy in the same way that the Gutenberg printing press later could be. For example, it could not be combined with paper or with movable metal type since these things had not been invented in Crete.
This is important to Diamond because it shows that major technologies feed on one another and on smaller technological innovations. In other words, the person who invented the Phaistos disk did not have all of these other technologies to combine with his own technology. This is important because it shows that technology arises when there are dense populations of people. Many people can invent various technologies and then someone like Gutenberg can put those technologies together to create something important.
What this means is that technological advances tend to rely more on population density (caused by agriculture) than on the quality of the people or of their culture. This is in line with Diamond’s main thesis.