The pipper is always acting as a real time gun sight, it's telling you where your rounds will land at the target's current range (assuming you have radar lock) if you pull the trigger now. The blinking diamond tells you where those rounds actually went at the target's current range. The difference between the solid diamond and blinking diamond is how far off your aim was for that shot.
In pistol/rifle terms, the solid diamond on target is your bullseye, the blinking diamond is the hole in the paper. You still aim using your sights, not the hole.