Diplomat as Reaction reduces your hand size by 1. Also, Diplomat can only be revealed when you have 5 or more cards in hand.
That means normally, when you have a 5 card hand, you get to use Diplomat once on the first attack, then have 4 cards in hand and that's it.
In your case, you had a 6 card hand due to Flag. That means after using Diploamt once (reducing your hand size to 5), Diplomat was still applicable, so you got asked again.
Note that in an IRL game nobody could tell if you were revealing the same Diplomat, or another one. So the ruling was made early (for Secret Chamber) that you could reveal a Reaction again and again (without stalling).
The example was you react to an attack with revealing Secret Chamber (draw 2 cards, put 2 cards on top of the deck), then reveal a Moat (which you may have gotten from the draw) to be unaffected by the attack, then react with Secret Chamber again (maybe putting the Moat back on top of your deck so it is ready to stop an attack later).