Chord progressions by themselves are generally pretty boring. Without an interesting melody, textural accents or a strong vocal performance, the chord changes acting behind a tune are like set pieces in a theater changing every act without any actors or dialogue. Add in the right emotional or melodic narrative on top, and a stale I-IV-V or ii-V-I progression seems endlessly fulfilling.
There are ways to make chord progressions themselves more interesting, more satisfying and more open to harmonic action. If you've ever listened closely to a Beatles or Elliott Smith song, or paid attention to the backing of most jazz tunes, you know what we're talking about. One way to liven up a progression is to use diminished chords to connect more common chord patterns.
Diminished Chords
A diminished triad is simply a minor third stacked on a minor third. It's like a minor triad but with the fifth knocked down a half step. For this reason, diminished triads are sometimes called minor flat five chords. You can add a seventh on top for a more jazzy feel, but the fundamental color of a diminished chord is expectant, uncertain, yearning for resolution. This makes them great for getting from one chord to another while adding a bit of unexpected movement and momentum.
As a Pivot Chord
One use for diminished chords is to connect two independent progressions. This is especially useful when the end of one progression would not smoothly connect to the beginning of the next, often when it needs to resolve to a minor chord. The sample in the video above from the George Harrison tune is a perfect example.
As a Passing Chord
Another use actually works the diminished chord into the fabric of a common progression. This is especially common in jazz. In the context of a common ii-V-I progression, a passing diminished chord can provide extra suspense and movement, allowing for more interesting melodic movement.