My meter (in diode mode) outputs 1mA/3 volts. The meter reeds volts. It the voltage is above 2 volts it reeds “over load”. For a good diode it will reed OL in one direction and the forward voltage drop (at 1mA) in the other direction. You can tell what type of diode by the voltage rating. Silicon? Schottky? Germanium? A 1000 volt diode will read different than a 50 volt diode.
For testing a transistor you are really only testing for diodes from B-E and B-C. Just like high voltage silicon is different than low voltage silicon, in some cases you might see a difference between B-E and B-C silicon.
This is not a great test but it is simple and fast. Generally when a diode or transistor “dies” it will flunk the simple forward voltage drop test.