Question: Could you explain what is a difference between readable vs legible? 

Which should I use when I want to say "This diagram is easily readable/legible" while meaning - "It is very easy to read and understand meaning of this diagram"?

Answer: 
Both **legible** and **readable** have sense of "clear enough to read".

> 
> Her handwriting was clearly legible.  
> 
>  The figures should be clearly readable
> 
> 
> 

But, **readable** also may mean "easy, interesting and enjoyable to read".
**Legibility** is about how easy it is to distinguish **individual** elements such as letters.

**Readability** is about how easily **blocks** of elements—such as paragraphs—are understood.

— [Source 1](http://www.fonts.com/content/learning/fontology/level-4/fine-typography/legibility)

— [Source 2](http://michalisavraam.org/2009/05/readability-vs-legibility/) provides a picture of less-legible, more-readable text, and the opposite.

— [Source 3](http://alexpoole.info/blog/which-are-more-legible-serif-or-sans-serif-typefaces/)

![readable but illegible](https://i.stack.imgur.com/d25MN.png)

In the case of diagrams the same idea holds. Illegible could be due to smudges or mis-printed type. Unreadable could be due to a flowchart where the organisation of the elements is confusing.

![not illegible but definitely not readable!](https://i.stack.imgur.com/1g1Q4.jpg)