I don't have access to the B737NG electrical diagram, but I am assuming this is a diode between the output of a Transformer/rectifier and the DC busbar it feeds? If so, this is to prevent DC current flowing back into a faulty or switched-off TR.
In simple terms a diode is an electrical 'one way valve' that stops current flow in the reverse direction, and allows current flow in the correct direction. Used in the context above, it forms an automatic switch that switches on and allows current flow if the TR is producing the correct output voltage. If the TR is producing low, or no output voltage, the diode automatically switches off.
If a TR had failed with a shorted output stage for example, with no diode on the output, it could render the busbar U/S by effectively shorting that out too. In shorting out the busbar, the TR and the associated wiring could overheat and/or cause a fire. (This is assuming the busbar has another source of power, not just the TR).
If my assumptions are correct, I hope this helps.