As if those are the only two types???

There are Diamonds from status matches, there are Diamonds on challenges, there are Diamond who qualify through stays (not nights), through base points (not nights), etc, etc, etc.

IMHO, your question is phrased wrong. Instead making all these assumptions, IMHO the question should be: "Does any know how hotels prioritize upgrade when there are fewer upgrades available than the number of Diamonds at the hotel. Is the consistent across all properties, or does it vary with the property?"

Consider this very simple fact: If you are booked into a room with bed configuration X and some other Diamond is booked a room with bed configuration Y, and the only upgrade available is upgraded bed configuration Y, isn't it likely they might choose the Diamond who reserved the same bed configuration as the upgraded room has, rather than based on anything related to how the person earned thier status?

So it could be as simple as you're getting fewer upgrades because of something like the type of room you're reserving and how it compares with the types of rooms most frequently available for upgrade.

Also another factor is length of stay. If the upgraded room is only available for one night, if your reservation is for two nights and another Diamond's reservation is only for one night, guess who's most likely to get that upgrade? @:-)