Theoretically you can use deconvolution to weaken diffraction effects (restore details), but this would be very error-prone (and heavily lens-dependent) way - or a very resource-hungry one (you can estimate best deconvolution parameters by trial and error and anlyzing results). Then people use different sharpening techniques, but those do not actually recreate details, only make image sharper. What C1 does internally, I have no idea - most likely some combinations of different methods.
This looks pretty much like sharpening - well, I don't have any comparative results about what deconvolution can do, but here no details are restored, rather some details (thin and not contrasty lines) are removed, also many sharpening artefacts are visible (dark halos around bright spots).
Nevertheless the result looks better than original :) Most likely focus stacking (using optimal aperture) could yield even better results - but would require much more time and preparation.
About diffraction in my images - I don't care much. Usually I shoot using quite wide aperture; when I need 1/16 or similar (on APS-C), then I can get pretty good results with sharpening (using some DXO Photolab trickery - their noise removal + sharpening algorithms make wonders).
Yes, photo stacking is the optimum solution. I use Helicon and it is pure magic. It even seems to account for some movement.
My problem was when I shot a set in windy conditions. I was curious to see if using F45 might save the day. Whatever C1 does, it yields a usable image. I might experiment at even smaller apertures, to see how far I can go in difficult situations.
A popular review phrase is that diffraction "sets in" at some increasing f/number - as if it suddenly becomes visible instead of lesser visibility at values such as f/2.8.
A less well-known factor is the sensor's pixel-pitch. For example, my Sigma SD9 has a 9.12 um pitch and shows very little diffraction at f/11 or lower. On the other hand, my Lumix DC-G9 can show diffraction even at f/5.6.
At f/45 the Airy disk diameter is 61 um - a whopping total of 10 normal sensor 6um pixels! ... mucha convolución ...
i can only see difraction when im shooting spiders at 10 x and view the image at 200 % with my apsc sensor. the 5um a7iv sensor is very crisp using 10x objectives. nothing sharpening cant fix but does add noise to my a6700.
Which begs the question about whether with F45 showing at the readout closest focus, where I have lost 2 stops, the diffraction effect is really F22, which the camera would read for the same setting at infinity.