The Diamond Dogs themselves may be just a name they've taken on as a mining group. Every other dog would be on the surface living more normal lives while the diggers collect valuable gems and stones underground, living most of their lives down there.
They may actually eat them, but that's likely restricted to dragons.
Given they seem to have huge damn cartloads of them lying about for any unicorn to request, they must do a lot of decoration we don't see. This and the total lack of women leads me to believe they are a race of Hard Gay.
you do realize that if you EVER do a FF of this show you will have to either do a one video compilation of all the fan favorite background characters, or risk people assuming you're gonna give a separate FF for every single one.
They may actually eat them, but that's likely restricted to dragons.
Now they should have got Sweetiebelle, I'm sure she'd love to get her gem finding talent, if the dogs could handle her that long.
and the Rarity complaining in that episode