Emperor Diaz was the leader of the human forces during the Dragon Campaign. He began the war, rallying the humans together and giving the Dragoons their Dragoon Spirits. He gathered them all at Fort Magrad. He died during the war, and was given the name of Holy Imperial Gloriano. He's remained an icon of the war ever since, and anywhere the war is spoken of, his name is right there with it.
In the game, the party hears whispers of a revived Emperor Diaz, which steadily grow to meeting him in person. In the first disc, Greham says that Emperor Diaz brought him his Dragoon Spirit. Later Emperor Doel mentions him, saying he planned out everything that happened in Serdio and that Lloyd was a mere pawn.
In the second disc, Lloyd again claims that he is working for Emperor Diaz when he says that he wants what Emperor Diaz and the "god" want.
In the third disc, they hear more about him, how he and Lloyd have been working together. First we learn that while Dart was away chasing Lloyd, Emperor Diaz took action and kidnapped Shana. The on their way to rescue her, Lloyd tells them that the "world will be reborn into the utopia that Emperor Diaz and I desire." They learn of how he desires to cross the Moon Child with the body of the god to create this utopia. Eventually, they reach Vellweb, where he is staying for the time being, and he is revealed to be Zieg Feld instead of who we thought he was this whole time.