They take the present participle form of the verb (ing form).

A good example is “i like swimming” I is the subject, like is the verb and swimming is the direct object (usually a noun but in this case is a verb acting as a noun”

As to diagramming, I would look it up in wikipedia. Here is what I saw on a quickie search:

Gerunds and gerund phrases

Gerunds are placed on a “staircase,” which is then on a tower that has an upside down triangle base and a straight line going up to the staircase. The staircase is two steps, and the gerund should be placed onto it diagonally, as if it were resting full length on the stairs. The remaining parts of the gerund phrase follow it on a horizontal line connected to the edge of the “stairs.”

http://www.chompchomp.com/terms/gerundphrase.htm