To begin, poetic diction must be defined. Poetic diction refers to the style of writing used in poetry (the linguistic style, vocabulary, and use of figurative language--normally metaphors). Up until Wordsworth's writing of the 1802 preface to Lyrical Ballads, the adherence to the poetic diction had yet to be seriously challenged.
Wordsworth's issue, essentially, with the use and adherence to poetic diction was the fact that it tended to alienate the common man. Given that the common man did not speak using elevated vocabulary and figurative language, Wordsworth believed, given he wanted poetry to speak to all, that complete adherence to poetic diction needed to be dropped.
Perhaps the best way to illustrate Wordsworth's point on the elimination of poetic diction is to examine the 1802 preface of Lyrical Ballads:
There will also be found in these volumes little of what is usually called poetic diction; I have taken as much pains to avoid it as others ordinarily take to produce it; this I have done for the reason already alleged, to bring my language near to the language of men, and further, because the pleasure which I have proposed to myself to impart is of a kind very different from that which is supposed by many persons to be the proper object of poetry.