Definition:
Sound in a film either exists inside the world of the story or it does not. Diegetic sound exists inside it. It is any sound that originates from a source within the film's reality: dialogue, ambient noise, a radio playing in a room, or footsteps on a floor. The characters can hear it. It belongs to the world they inhabit.
What It Means in Movies:
When a character turns on a record player, and music fills the room, that music is diegetic. It exists in the scene. When the same music swells on the soundtrack as a montage plays out, but nobody in the film is playing it, that is non-diegetic. The audience hears it. The characters do not. Understanding which is which is fundamental to sound design.
Why It Matters:
Sound designers think constantly about the diegetic status of every sound in a film. Getting it wrong creates a kind of cognitive dissonance that audiences feel without being able to name. A score that bleeds into diegetic space without justification. These are not small errors. They affect how real the film feels.
Example:
In Slumdog Millionaire, the music during the Bollywood dance sequence at the train station is non-diegetic. Earlier in the film, when a character hums a tune to herself, that is diegetic. Same film. Two completely different relationships between sound and story.