Bill Tindall, E.Tn.
agree on all points. A 1 mm mound of dry on the top of a spatula is plenty, probably way less than a milligram. As David says, the plate will become milky at first from the diamond slurry.
I've only used large loose diamonds on a mild steel plate, and that wasn't ideal, so I'll defer to bill on those. They rolled on the steel plate for a while and the whole shebang worked better with a bunch of rolling diamonds, but that's far from ideal (they're abrading the substrate and the object to be ground at the same time).
Same experience with cast iron, which is why I explored using acrylic for the coarser grits. Large particles embed better on a softer substrate.
I think diamond 30 micron and less is the practical range for cast iron and this range is good for most tasks.