Diamonds set evenly in circlet (3)
I believe the answer is:
ice
'diamonds' is the definition.
(I've seen this before)
'set evenly in circlet' is the wordplay.
'set evenly in' indicates alternate letters (the letters in even-numbered positions).
The alternating letters of 'circlet' are 'ICE'.
(Other definitions for ice that I've seen before include "Do cake decoration" , "dessert" , "Girl's best friends" , "A state of water" , "Formality" .)