The 19-year-old was highly rated by the club but has followed winger Jadon Sancho out of the Etihad after the England global left in the summer of 2017, going on to make a huge impact at Borussia Dortmund.
"He's much better", Guardiola said.
With the match practically concluded, Pep Guardiola opted to remove star man Sterling to throw in Leroy Sane, in a somewhat like-for- like adjustment a few minutes later. Some have patience, some trust what the club want to do, and some don't.
"But now they play every week in friendly games, in front of 12 people here in the second team".
The second leg meeting of League One side Burton, managed by Nigel Clough, and Premier League champions City takes place at Albion's Pirelli Stadium on Tuesday, January 22.
"Now he's back, he will be fresh in the mind and the legs, and is going to help give us extra creativity in the last third, in the fight", Guardiola said. If the guys are not happy... if you want to stay here it's because you want to stay here'. If not the door is open.
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"I'm sad to see him [Diaz] go, but he wants opportunities, so good luck to him".
Foden is set to start the Burton clash with Guardiola having virtually a full squad to choose from.
"Two weeks, three weeks maybe [until he returns]".
The former Barcelona B manager believes there is a simple way to encourage Premier League managers to play more young players, and was scathing about the quality of the Premier League 2, the U23 competition. I never did [request long grass against Liverpool].
"I'm not the greenkeeper", Guardiola added. Never did we manipulate it.
"It shows the strength of the squad we have here, how good the players are - it is hard to get in, but we all try our best", Foden told reporters. You do the best for the opponent, respect the rules for everybody'. I never speak with the groundsman. So I think it was my knee, so I kneed it in.