This is kinda late now, I watched part 5 about like 4 years ago when I was starting to get into JJBA, saw the final battle and RTZ looked cool but I understood it as just the action never happening in the first place. Looking back on it, if RTZ was merely just an ability that prevented the result from happening in the first place then why didn't diavolo just react in time with GER after his actions were nullified? I currently interpret it as this:
STARTING POINT: Right before Time erasure
Diavolo activates time erasure
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Diavolo sees the future and acts upon it
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Diavolo tries to impale giorno right before time erasure ends
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(RETURN TO ZERO ACTIVATES), Diavolo wants to impale giorno but can't physically do so, he tries again and yet he still can't do it.
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Everything is reverted back to the starting point with every variable being the same except for RTZ itself
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Giorno lands a stand barrage on Diavolo before he could even react and activate time erasure
If everything was reverted back to "zero" then the variables would've been the same, diavolo still could've activated time erasure but he didn't. The lame explanation is that diavolo was still stunned and confused from rtz, but I don't really like that so here is my interpretation on how RTZ works fundamentally and how it worked in the final battle.
1.)RTZ reverts an action back to "zero"
-basically the "undo button" analogy, reverts everything back to the starting point. This is the simpler part.
2.) RTZ stop the casual progression of an action.
-Lets visualize it for a moment, Diavolo forms an intention, initiates movement, and produces a chain of events that would lead to the punch landing. But here is where RTZ comes into play, It denies the causal chain from producing its intended result by nullifying the action's progression, so the action cannot successfully become an accomplished reality.
The second part of RTZ explains how diavolo couldn't continue his punch in time erasure nor did he react to GER coming towards him even after everything was reset back to zero. Diavolo simply couldn't do anything. GER stopped diavolo from acting upon his intentions by stopping the chain evens that would lead to the result.
This was first shown when diavolo tried to impale giorno but he couldn't continue the attack. Then after everything was reverted back to zero, diavolo still couldn't activate time erasure again. Why? It's because GER was stopping the progression of the action itself, essentially Diavolo can attempt to react, but GER prevents those actions from reaching a successful result. Even trying to defend himself doesn't help him escape the ability.
This is my take on RTZ, hope you guys can comment your thoughts on this