Cellulitis: This is the most likely diagnosis given the presence of erythema, edema, and the patient's diabetic status. Cellulitis is a common infection in diabetic patients, especially in the lower extremities, and can be caused by streptococcal or staphylococcal bacteria.

Deep Vein Thrombosis (DVT): Although DVT typically presents with swelling and pain, the presence of erythema could suggest an inflammatory component. It's essential to consider DVT, especially in a diabetic patient, due to potential coagulopathy and increased risk of thrombotic events.
Eczema or Dermatitis: These conditions could present with erythema and edema, especially if the patient has a history of skin allergies or irritants. However, the absence of open wounds or a clear history of exposure makes this less likely.
Lymphedema: This condition could cause edema but typically does not present with acute erythema unless there is an overlaying infection.

Necrotizing Fasciitis: Although rare, this condition is life-threatening and can present with similar symptoms, including erythema and edema. The presence of severe pain out of proportion to the physical findings and the patient's diabetic status increases the suspicion for this diagnosis.
Gas Gangrene: This is another severe infection that can present with swelling, erythema, and potentially crepitus (a grating sensation or sound from the movement of broken bone fragments or air in the tissues). It is less common but critical to identify early due to its high mortality rate.
Septic Thrombophlebitis: This condition involves an infected thrombus in a vein and can present with signs of infection (erythema, edema) along with signs of thrombosis. It's a serious condition that requires prompt diagnosis and treatment.

Erythema Nodosum: This is an inflammatory condition that can cause erythema and swelling, typically on the anterior aspect of the legs. It's less likely given the posterior and medial location of the symptoms in this case.
Panniculitis: An inflammation of the subcutaneous fat, which can cause erythema and swelling. It's rare and would be an unusual presentation in this context without other systemic symptoms or specific risk factors.
Infectious Causes like Erysipelas: A type of skin infection that can cause well-demarcated erythema, typically on the face or lower extremities. It's less common than cellulitis and usually has a distinct border.