EDIT: They spawn by setting max_depth higher. At this point I think max_depth should be set higher by default.

{
	"type": "sphere",
	"ore": [
		{
			"block": "minecraft:coal_ore",
			"weight": 1
		}
	],
	"indicator":
	{
		"blocks": "minecraft:diamond_block",
		"rarity": 1
	},
	"stone": "minecraft:stone",
	"rarity": 60,
	"min_y": 0,
	"max_y": 40,
	"density": 100,
	"vertical_size": 10,
	"horizontal_size": 20
}

No diamond block is spawning on surface

They are set to 32 as it's sufficient for indicating surface veins, which is the intention. For reference, it's also approximately the same value the inspiration mod (TerraFirmaCraft) uses (35). max_depth does exactly what it says on the tin - it's the maximum depth for indicators to generate.