Diamagnetic materials are those which are slightly repelled by a magnet. When placed in a magnetic field they get magnetised in a direction opposite to that of the field. Hence they move away from the field.
Now look at the diagram.
The U Tube is filled with a blue coloured diamagnetic liquid.
There are 2 magnets placed, one on the left and one on the right side of the right arm of the tube.
The opposite poles of the magnets are facing the arm.
Due to this, there is a uniform magnetic filed in that region directed from left to right.
The liquid being diamagnetic, gets repelled and moves down, reducing the level of the liquid in one arm of the tube.