What is meant by the refractive index of a diamond is 2.42?

The number is comparative.

Refractive index is a dimensionless number that represents how fast radiation -- in this case, light -- travels through a medium, in this case, diamond. The number assigned to a diamond is the highest number on the scale. The scale includes gases, liquids and solids.

This means that with a refractive index of 2.42, 'light travels 2.42 times as fast in vacuum as it does in a diamond'.

You can read more about refractive indices, below.