How do you make these diamond patterns like the one on the very bottom tier? Is there a cut out for this?

http://i43.tinypic.com/339rtyt.jpg

There are diamond shaped cookie cutters you can use to do this
Or you can just cut them out by hand use a ruler and mark the fondant and cut out using a knife.

If you have a square cutter (wilton sells a set of three sizes) you can bend it into a diamond. I usually do that when I need a diamond cutter.