The Diamond Age depicts a near-future world revolutionised by advances in nanotechnology, much as Eric Drexler envisioned it in his nonfiction book Engines of Creation (1986). Molecular nanotechnology is omni-present in the novel's world, generally in the form of Matter Compilers and the products that come out of them. The book explicitly recognizes the achievements of several existing nanotechnology researchers: Feynman, Drexler and Merkle are seen among characters of the fresco in Merkle-Hall, where new nanotechnological items are designed and constructed.
The book contains descriptions of various exotic technologies, such as the chevaline (a mechanical horse that can fold up and is light enough to be carried one-handed), and forecasts the use of technologies that are in development today, such as smart paper that can show personalized news headlines. Major cities have immune systems made up of aerostatic defensive micromachines, and public matter compilers provide basic food, blankets, and water for free to anyone who requests them.
Matter compilers receive their raw materials from the Feed, a system analogous to the electrical grid of modern society. The Feed carries streams of both energy and basic molecules, which are rapidly assembled into usable goods by matter compilers. The Source, where the Feed's stream of matter originates, is controlled by the Victorian phyle (though smaller, independent Feeds are possible). The hierarchic nature of the Feed and an alternative, anarchic developing technology, known as the Seed, mirror the cultural conflict between East and West that is depicted in the book. This conflict has an economic element as well, with the Feed representing a centrally-controlled distribution mechanism, while the Seed represents a more flexible, open-ended, decentralized method of creation and organization.
Society in The Diamond Age is dominated by a number of phyles, also sometimes called tribes. Phyles are groups of people often distinguished by shared values, similar ethnic heritage, a common religion, or other cultural similarities. In the extremely globalized future depicted in the novel, these cultural divisions have largely supplanted the system of nation-states that divides the world today. Cities in The Diamond Age appear divided into sovereign enclaves affiliated or belonging to different phyles within a single metropolis. Most phyles depicted in the novel have a global scope of sovereignty, and maintain segregated enclaves in or near many cities throughout the world.
The phyles coexist much like historical nation-states under a system of justice and mutual protection, known as the Common Economic Protocol (CEP). The rules of the CEP are intended to provide for the co-existence of, and peaceful economic activity between, phyles with potentially very different values. The CEP is concerned particularly with upholding rights to personal property, being shown to provide particularly harsh punishment for harming the economic capability of another person. The role of the CEP in the world of the novel could be seen in comparison with the roles of real-life international organizations such as the United Nations and the International Monetary Fund.
"Thetes" are individuals who are not members of any phyle and are often socially disadvantaged and economically poor, being similar to second-class citizens under the CEP. In the novel, the material needs of nearly all thetes are satisfied by freely-available food and clothing, albeit of low quality; thetes without the political connections of a phyle are entitled to similarly low-quality "free justice."
The book distinguishes three Great Phyles: the Han (consisting of Han Chinese), the Neo-Victorian New Atlantis (consisting largely of Anglo-Saxons, but also accepting Indians, Africans and other members of the Anglosphere who identify with the culture) and Nippon (consisting of Japanese). The novel raises the question as to whether Hindustan (consisting of Hindu Indians) is a fourth Great Phyle, or a "riotously diverse collection of microtribes sintered together according to some formula we don't get."
Internally, the New Atlantis phyle is a corporate oligarchy whose "equity lords" rule the organization and its bylaws under allegiance to the vestigial British monarchy. Other phyles are less defined – some intentionally, as with the CryptNet group or the mysterious hive-mind Drummers. Over the course of the story, the Common Economic Protocol sponsors the investigation of clandestine Seed technologies in order to preserve the established order from subversion. It is also hinted that property rights are so expansive that the Protocol recognizes children as the economic assets of their parents.