The referee decided that Diaz was offside and didn't award the goal. This is correct application of Law 10. The referee's error is factual rather than legal. The VAR knew that Diaz was onside but it is not his role to award the goal in accordance with Law 10; it's his role to inform the referee that a clear and obvious error has occurred (hence my earlier post regarding procedural error). Ultimately, it's the referee's decision whether or not to award a goal. Nobody has "breached" law 10.