connected on top of something that looks like a diode
Boby, that is not a Diode. It is a Fuse. It appears to be a 100 or maybe a 300 amp fuse (too dirty to decipher the writing). It serves to protect the wires from being over heated and burning up. Perhaps to protect your boat from a fiery ending.
It is what is known as an MRBF fuse, as
@LeslieTroyer has described above. It is a good type of fuse for your boat and it appears to fit.
I understand your concern with "Voltage drop". My opinion, your focus on the connections is directed to the wrong location. Voltage drop most often occurs due to undersized wires, and dirty connections. Less frequently at or near the battery.
I would draw a plan of your wiring, the sizes of all the wires on the plan and what appliance each of the lines feeds along with their amperage demand.
This way you can get a clear understanding of why the systems are the way they were installed. Then you can better judge if they need repair, replacement or just cleaning and left to do their job.