Hi, welcome to the site. This criteria links directly to your workplace practice. Do you know if it's something your assessor will be observing when they visit?
To reflect on how you encourage children to understand differences, diversity and individuality consider how you value each child, how you react and what you say in a variety of situations eg. are you negative, positive, enthusiastic, cautious, do you judge people when they say something you feel differently about, would you consider yourself a role model? do you recognise discriminatory practice and challenge it appropriately.
What does the setting's SEN, Inclusion and Equal opportunity policies say?
What activities does your setting plan that explores diversity and the cultural differences and individuality that involves? What resources do you have that promote understanding different backgrounds and how listening to each other enables us to begin understanding each other.
What role do you have in supporting the settings partnership with its parents?
If you have
this level 3 children's workforce handbook pages 123+ are good reading
Best wishes