Maximally diverse interpretations are described in the context of reducing formulas in the logic of equality with uninterpreted functions (EUF) to propositional logic for processor verification. EUF is used to abstract data manipulation during verification, and the resulting propositional formulas can then be handled with Boolean methods such as BDDs and SAT checkers.
In the cited work, the key motivation for maximally diverse interpretations is simplification of the propositional encoding. The authors state that many equations in the relevant verification formulas appear only in positive form. Under this condition, they can reduce the interpretations of function symbols that must be considered for proving universal validity to those that are maximally diverse.
The concept is therefore presented as a proof-reduction device: instead of ranging over all possible interpretations of uninterpreted functions, the verification procedure only needs this restricted class of interpretations in the cases identified by the paper. The paper reports experimental evidence that this overall approach is efficient for verifying pipelined processors using the Burch-and-Dill method.