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The unit of measure originates from the word "carob". The Carob tree is an evergreen tree native to the Mediterranean region and it is believed that the seeds were the original "carat", since their consistent size and availability made them a perfect tool to weigh diamonds.

Weight vs. Value
Be careful not to confuse equal carat weights with equal value. Two stones can easily be of the same size and have a vast difference in value. The larger the stone the rarer it is. As such, the price per carat will increase dramatically as the individual stone weight increases.
Carat denotes the weight of the diamond.

1 carat = 200 milligrams or 0.2 grams

The carat weight of the diamond will have the biggest influence on the overall price followed in order by clarity, colour & cut.

You will often hear people referring to the diamond weight in “points”.  This is very common amongst the jewellery trade.

1 carat = 100 points

It’s important to keep in mind that although the carat weight will certainly influence the visual size, not all diamonds that weigh the same are the same size ie; carat weight does not equal size in mm's

For eg, You can have a diamond which weighs 1 carat and is smaller visually than say a 0.80ct or 80 pointer.  Obviously this is not a good thing.

However some diamonds are cut too deeply and therefore have unnecessary weight hiding in the depth of the diamond.  This is bad for 2 reasons a) it will make the diamond appear smaller than it should for it’s carat weight. b) it will make the diamond appear less brilliant than if it was cut correctly and had the correct depth. 
Learn more about Cut  (links to cut)

The table below represents the average size/weight ratio's of well cut diamonds.

Note: the table is only as a guide and is not meant to represent the actual size of the stones themselves. Also, since each diamond is uniquely and individually cut, the actual diameter will vary.