They don’t actually do a lot, they are largely a marketing gimmick.
Those with diabetes that is poorly controlled diabetes tend to over the longer term develop complications in the foot related to poorer circulation and damage to the nerves. Despite claims made by those who promote the special “diabetic socks“, there are no socks that can improve the circulation or reverse that nerve damage.
Having said that, socks that are too tight might be more dangerous in those with poorer circulation as that might further restrict that circulation. Socks that have prominent seams might be a point of irritation and cause problems with pressure points in those who have the nerve damage. You can call socks that are looser fitting and less prominent seams, ‘diabetic socks’ to increase sales if you want too, but most socks should be like that anyway.
Some diabetic socks claim to be made of special “fabrics” that can help keep the foot dryer by wicking away moisture from the skin, but any good sock should do that anyway, especially if you have an issue with excessive perspiration.
There is nothing inherently wrong with the concept of ‘diabetic socks’, but just be aware that they are just a good pairs of socks and they have no magical properties.