Edgeguarding is Bayo's biggest strength in this matchup. Due to his very punishable up-b, Bayo can really put the hurt on an offstage Diddy. Holding bullets off of aerials is the best play for punishing it. Since he just sits there until his up-b is charged, a fastfall nair, held out, turns into a spinning Frisbee of death. Up air can work just as well, if not better, for this same task.
For punishing Monkey Flip, it depends on the height. If they side-b below the stage, you can punish with the same plan as before. If the side-b is used right at ledge level or just above it, you have two options. One is to punish with a simple nair or fair. The other is a higher risk for a higher reward: If you can read that they will do the kick of Monkey Flip, you can try to Witch Time it. The placement of this could lead to a down air or down smash kill at low percents. Lastly, if they side-b very high, your only options are up air or Witch Twist.
Bayonetta
For punishing Monkey Flip, it depends on the height. If they side-b below the stage, you can punish with the same plan as before. If the side-b is used right at ledge level or just above it, you have two options. One is to punish with a simple nair or fair. The other is a higher risk for a higher reward: If you can read that they will do the kick of Monkey Flip, you can try to Witch Time it. The placement of this could lead to a down air or down smash kill at low percents. Lastly, if they side-b very high, your only options are up air or Witch Twist.