Diplomacy has improved quite a bit, and has become a more viable part of the game. This is important because Diplomacy is often neglected in 4x games, with generally underdeveloped with unsatisfying Diplomacy AI. There is still room for improvement, of course...

Good
+ Diplomacy modifiers, shown in Foreign Relations, are numerous and generally helpful.
+ Variety of treaties are nice and help build depth in the system. I like that having treaties helps build good relations.
+ The new Economic treaty is really helpful and goes well with the generally streamlined trade. Building a road to a foreign capital is really a great value and something worth investing in.
+ I like that AIs will approach the player with news of technology and spells, demands and offers of tribute. Helps make them seem more alive and interesting. I hate when 4x games make all AIs jerks, while forcing the player to bribe every AI for everything. Nice to actually have AIs trying to buy the player's friendship for once!
+ I really like Influence / Diplomatic mechanic. Using Influence as currency for certain buildings and units helps to distinguish it from Gilder.
+ The Diplomacy traits seem to be more helpful now. In past games, I had a hard time getting anything done even when using a Custom Sov / Faction with all the diplomacy traits. Now when I use that setup, I feel like I can have more success.
+ Trading research is a cool mechanic, but it isn't explained very well.

Bad
- Some diplomacy modifiers are not clear. For example, why does an otherwise friendly AI have an 'I just don't like you modifier?'
- Some treaties aren't available with no indication of why. Why can't I always offer an Alliance treaty? The option is present for some AIs but not others.
- Treaty expiration is annoying. Non-aggression pacts seem to expire way too fast.
- I don't think Alliance treaties are working properly. I have had allies attacked, but never gotten a message asking me to come to their aid. There needs to be a prompt calling on Allies to help.
- I have seen AIs declare war on other AIs, but when I go into the foreign relations screen, they don't even show up in each other's list of diplomatic relations. Must just be a bug.
- AIs sometimes offer huge tributes, but it isn't really explained why. In my last game as a custom Kingdom, I had several factions, including Empires, coming to me from early in the game with big tributes of 500-1500 gilder. I wasn't being aggressive towards them or anything and they didn't ask for anything in return. I wasn't even #1 in power...
- You can't move through cities, including allied / non-aggression pact cities. This is a HUGE problem because you can end up getting stuck, unable to move through an area despite having perfect relations. In my last game, my Sov and his party were exploring and ended up trapped between two allied cities, with no way to move because the cities grew behind them while they were exploring.
- You can be Allied with someone, then have the Non-Aggression Pact expire.

Suggestions:
o Why not allow open-ended non-aggression pacts? If the player or the AI wants to downgrade, let them. Forcing frequent renewal of treaties is unneeded micromanagement
o I would like to see Open Borders split from Non-Aggression. It would be nice to have the option to say, "we will be at peace, but stay out of my land." Maybe switch Open Borders to a Trade Treaty. That would make more sense since the Open Borders would be needed for Caravans.
o Allow units to move through cities if you have a Non-Aggression Pact or Alliance. This may change with Beta 4's handling of cities. Either way, units should never end up blocked or trapped by a city if they have open borders.
o Non-Aggression Pacts should be overridden by Alliances. If you Ally with someone, the Non-Aggression Pact should be included in that. If the Alliance ends, it should downgrade to a Non-Aggression Pact. You shouldn't have a Non-Aggression Pact expiring while Allied.
o Add a tooltip for all Diplomacy Modifiers explaining what they are and why you have them. So if the AI says I have a weak army, have a tooltip showing the difference in our strength. If they say 'we just don't like you' have a tooltip explaining where that is coming from.
o Have all researched treaties visible and available. If the AI will not consider that treaty, have them say so. Not having the treaty even visible for some AIs is just confusing and doesn't explain to the player why that treaty is not an option. I have seen this problem with Alliances and Economic treaties.
o Add an explanation for why an AI is asking for tribute / demanding tribute. This can be part of the flavor text or just an explanation. So an aggressive AI might say, "Your army is small and weak compared to me. Give me money or die." while a weaker AI might say, "I am weak with powerful neighbors, I will give you money to earn your support."
o Include an explanation of trading research. So if someone offers you 50 knowledge in Warfare for 50 knowledge in Magic, show what the impact will be so that player can evaluate and decide. Give Players the option to use this trading mechanic.
o If your Ally is attacked, give player's a prompt to intervene or break the treaty. If an Ally attacks an AI, have the AI decide if they want to call on their allies to join the war. If they do call on the player, give players a prompt to join the war or remain neutral. Same actions for the player should be available.
o Faction AI: I know this will come eventually, but make sure that the faction AIs are characterful. I don't think I should see Verga coming to me with huge tributes when I'm not a threat to him. Allow for a degree of unpredictability, but make sure the faction personalities are properly reflected in the actual gameplay.
o Add a bonus for having long-term treaties. Reward a long-term investment in peace.
o Add a diplomatic option to call for peace or war between AIs.
o Add multi-party Grand Alliances. If three or more factions ally with each other, they can form a united Grand Alliance. This would help with situations where your allies are killing each other.
o Add an option to liberate cities. If you liberate an Ally's city, have the option to return it to them for free and a big influence / relations bonus, or keep it for a big relations hit.
o Add the option to trade cities. Allow AIs and Players to demand cities as tribute.