If a multimeter reads "0.001" while testing both sides of a diode, what does this signify?

When a multimeter reads "0.001" ohms while testing both sides of a diode, it signifies that the diode is short-circuited. In a functioning diode, you would typically expect to see a high resistance reading in one direction (forward bias) and near infinity in the reverse direction. A reading of "0.001" ohms is exceptionally low, indicating that there is no resistance in the path of the current, which is characteristic of a short circuit. This means that the diode is essentially allowing current to flow freely in both directions, which is not the operational characteristic of a diode and suggests a failure.

In contrast, a functioning diode would show low resistance when forward-biased and high resistance when reverse-biased, while an open diode would provide infinite resistance in both directions. A diode in reverse bias would only show low resistance in the forward direction, but would still block current in the reverse.