Diamonds are fragile. You can break them to reveal facets. It's not as nice as cutting it like we do these days, but...
In 400 BCE they weren't digging up diamonds in a specific diamond mine for the purpose of having very hard, very brittle, very ugly rocks that they couldn't shape for their uses. So they had to know, even then, you could strike it to reveal the crystalline structure. Which is all that's needed to make it look pretty.
That said, I was also -wrong-. When I looked up "Earliest diamond jewelry" google secretly gave me earliest diamond wedding ring. In fact, diamonds had been used in talismans for over a millennia by that point to ward away dark spirits. These diamonds were broken apart into fairly decent approximations of d8s of crystal.
... which is so much cooler.