Meaning: This sentence means that if a talented person is lazy, someone with less talent but who works hard can achieve more.
Choice of Words: Diligence means hard work and dedication. Defeat means to win a competition or fight. Talent means a natural ability to do something well. Nap means to take a short sleep. When you put them together, "Diligence defeats talent when talent naps" means that hard work and dedication can overcome natural talent if the talented person is not working hard.