When talking about the stock market, diversification is more than owning a basket of stocks, even if those stocks are part of a mutual fund or exchange-traded fund (ETF). Diversification is about owning multiple asset classes.
The “traditional” portfolio that many investors hear about is the 60/40 portfolio. This means investors should have a portfolio with an allocation of 60% towards stocks and 40% towards bonds. But today, investors also understand the importance of having exposure to other asset classes that include commodities (e.g. precious metals), real estate, and, for the most risk-tolerant investor there are cryptocurrencies.
Diversification also means diversification within asset classes. Having money in eight ETFs will not provide diversification if all the ETFs invest in essentially the same companies.