There are two scenarios where DH has 'diminishing returns'

The more common sense is that DH after a point gives less % per point. (So for example, after 1600, it'd take 60 points for 1%, after 2000 it takes 100, etc).

I think it's more along the lines that DH is a linear stat, like Det and Tenacity. Each point of DH is worth exactly the same, technically, as the previous, but the amount it increases is less due to the linear nature.

Using simplistic numbers, if DH 0 is 100% damage efficiency, then DH 160 is 101% damage efficiency. You go up by 1%. DH 320 is 102% damage efficiency, you go up by 1% again, but from 101% to 102% is less of an increase (.99%).