According to R.L. Trask, "Lexical diffusion is phonetically abrupt but lexically gradual . . .. The existence of lexical diffusion had long been suspected, but its reality was only finally demonstrated by Wang  and Chen and Wang " (The Dictionary of Historical and Comparative Linguistics, 2000).
Examples and Observations:
- Lexical diffusion refers to the way a sound change affects the lexicon: if sound change is lexically abrupt, all the words of a language are affected by the sound change at the same rate. If a sound change is lexically gradual, individual words undergo the change at different rates or different times. Whether sound changes exhibit gradual or abrupt lexical diffusion is a topic that surfaces persistently in historical linguistics, but as yet has not reached resolution."
(Joan Bybee, "Lexical Diffusion in Regular Sound Change." Sounds and Systems: Studies in Structure and Change, ed. by David Restle and Dietmar Zaefferer. Walter de Gruyter, 2002)
- "[William] Labov's view of lexical diffusion is that it has only a very limited role to play in change. He says (1994, p. 501), 'There is no evidence . . . that lexical diffusion is the fundamental mechanism of sound change.' It happens but is only a complement--and a small one at that--to regular sound change. The most important factors in linguistic change appear to be long-standing trends in the language, internal variation, and social forces among speakers."
(Ronald Wardhaugh, An Introduction to Sociolinguistics, 6th ed. Wiley, 2010)
- Lexical Diffusion and Analogical Change
"I will argue that . . . lexical diffusion is the analogical generalization of lexical phonological rules. In the early articles by [William] Wang and his collaborators, it was seen as a process of phonemic redistribution spreading rapidly through the vocabulary (Chen and Wang, 1975; Chen and Wang, 1977). Subsequent studies of lexical diffusion have supported a more constrained view of the process. They have typically shown a systematic pattern of generalization from a categorical or near-categorical core through extension to new phonological contexts, which are then implemented in the vocabulary on a word-by-word basis. . . . [T]he item-by-item and dialectally varying accent retraction in non-derived nouns like moustache, garage, massage, cocaine is an instance of non-proportional analogy, in the sense that it extends a regular stress pattern of English to new lexical items. What I contend is that genuine instances of 'lexical diffusion' (those which are not due to other mechanisms such as dialect mixture) are all the results of analogical change."
(Paul Kiparsky, "The Phonological Basis of Sound Change." The Handbook of Historical Linguistics, ed. by Brian D. Joseph and Richard D. Janda. Blackwell, 2003)
- Lexical Diffusion and Syntax
"Although the term 'lexical diffusion' is frequently employed in the context of phonology, there has been an increasing awareness in recent studies that the same concept is often applicable to syntactic changes as well. [Gunnel] Tottie (1991: 439) maintains that '[m]uch less attention seems to have been paid to the problem of regularity versus lexical diffusion in syntax,' while at the same time she argues that '[i]n both morphology and syntax, lexical diffusion seems to have been implicitly taken for granted by many writers.' Likewise, [Terrtu] Nevalainen (2006:91) points out in the context of syntactic developments the fact that 'the incoming form does not spread to all contexts at once but some acquire it earlier than others,' and says that the phenomenon is called 'lexical diffusion.' In this manner, the concept of lexical diffusion is extendable to various linguistic changes, including syntactic ones."
(Yoko Iyeiri, Verbs of Implicit Negation and Their Complements in the History of English. John Benjamins, 2010)