From the IPMS Competition Handbook:A diorama is a combination of model(s) and a believable setting that tells a story, sets a mood, or creates a charged atmosphere. In addition to evaluating the modeling of a diorama's individual elements, the judges will consider the strength of the diorama's story line or mood and the overall presentation of the diorama. These three factors are equally important. Dioramas with superbly modeled components but a weak story line and presentation will almost certainly lose to a diorama with well-modeled components and strong story and presentation.
Model Components: The individual model components of a diorama will be judged according to the criteria specified in the appropriate individual class. That is, armor pieces will be subject to armor judging criteria while figures will be evaluated according to the figure modeling guidelines. As always, the basics of construction and finishing are of prime importance. Terrain, roadwork, buildings, and accessories that set the scene of the diorama will be evaluated similarly to the primary model components. Basic construction and finish are once again paramount.
Presentation: The diorama base should comprise individual elements that combine to form a realistic and/or plausible setting for the primary model component(s). Each of the elements also should be believable in its own right and consistent with the action or mood being depicted. The degree of imagination and inventiveness used to pose the main elements will factor into the overall presentation evaluation. The base should provide a focal point for the scene and fit or enhance the story line or mood of the diorama. Dioramas with a well-defined focal point highlighting a simple story generally will have a stronger presentation than those attempting to portray an entire battlefield.
Story Line, Mood, Atmosphere: This element is what separates the diorama from models merely set on a base. A simple derelict vehicle rusting away in a field can set a mood as well as, or better than, a complete recreation of the Battle of Waterloo. The story, mood, or atmosphere created by the diorama should be obvious; the judges shouldn't have to strain to see it. Stories can incorporate historical or even humorous aspects. Here again, imagination and inventiveness in telling the story or setting the mood can lift a diorama out of the ordinary.
Additionally, it;s like the apocryphal question about art, I can't define itbut I know it when I see it.
A quick search on rules of compostion will be a great way to learn what works and what doesn't.
Some things I look at when judging a dio:
Is the story consistent, ie, if there's combat, no one should be standing around idle or playing bullseye.
If a figure is walking his next step should not be into a wall or tree or other object, nor should he be walking out of the side of a tank.
In general, figures should draw you to a focal point as should olther elements, eg, a gun barrel should not point away from the focal point. This draws the eye away from what the builder is trying to show you.
In general, most stock kits don't work very well in settings other than the box art and even then, many of Tamiya's older sets feature incionsistent uniform's. Dragon's are better, but all the figures may not work together in one cohessive scene.
Figures and vehicles should be matched in time and space, no early war uniforms with late war tanks, no Pacific camo or US Marines in Europe.
Wheile almost anything is possible, in the universe of all possibilities, not everything is probable, likely or liogical, As Gino pointed out, deploying a fire team under the barrel of a tank is not a llogical thing to do, though it would be physically possible to be in that position.