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We get a mini-history lesson on reddlemen and how the profession is becoming pretty scarce. But reddlemen used to be fairly common in the area and "A child's first sight of a reddleman was an epoch in his life. That blood-coloured figure was a sublimation of all the horrid dreams which had afflicted his juvenile spirit since imagination began" (1.9.3).
Our reddleman is an oddball, though, because he wasn't born into the profession; he chose it, and he took a major step down on the social ladder as a result.
Diggory helpfully digs out an old letter that looks very worn. The name on the letter reads Thomasin Yeobright.
Apparently, Diggory proposed to Thomasin and she wrote him a letter refusing his offer. She tells Diggory that she doesn't love him and that her aunt wouldn't be overly impressed with his job of running a small dairy farm, anyway.
Poor Diggory. In a heartbroken and rebellious fit, he quit his respectable job and became a reclusive reddleman.
Now he plots how he can best "watch over" (or stalk) Thomasin. He's decided to help her marry Wildeve if he can, since that's what she wants and it will avoid a major scandal.
So Diggory wanders around the heath and lurks near Eustacia's house for four nights until he finally hears a splash in Eustacia's pond.
Then he covers himself with some branches and proceeds to spy on Eustacia and Damon Wildeve.
Eustacia and Damon are having another argument/blame-fest. Wildeve whines about his predicament and Eustacia tells him he sucks.
But, Eustacia admits to kind of enjoying the intrigue and drama: "Love is the dismallest thing where the lover is quite honest" (1.9.25).
Oh, that Eustacia.
Wildeve complains about how nice Thomasin is, since it's making it hard for him to dump her.
Eustacia tells him that he's making her suffer, but Damon counters that she toyed with him and acted like she didn't want him until he started chasing after Thomasin. Oh, the games we play.
They talk in circles some more and both confess how much they hate the heath.
Wildeve then impetuously proposes that they run off together to America.
Eustacia is taken aback and asks for time to consider his offer.
He says OK and leaves.
Then Diggory quietly goes back to his van and plots ways to help Thomasin by taking out the competition: namely, Eustacia.