It's understood one's engaged in diplomacy (5)
I believe the answer is:
tacit
'it's understood' is the definition.
(thesaurus)
'one's engaged in diplomacy' is the wordplay.
'one' becomes 'i' (Roman numeral).
'engaged in' indicates putting letters inside.
'diplomacy' becomes 'tact' (I've seen this before).
'i' inserted inside 'tact' is 'TACIT'.
(Other definitions for tacit that I've seen before include "Understood without being put into words" , "Implied but not directly expressed" , "Implied without being said" , "Unspoken but understood" , "Implied -- inferred" .)