Hi,
To turn ON the MOSFET V_GS needs to be less than -1,2V. More negative. -3V for example.
V_GS is V_gate - V_source.
Now gate is connected to GND = 0V
Thus - to turn ON the MOSFET: V_source needs to be higher than +2V. (More positive)
Without the diode .. it's difficult.
But due to the diode, the expected source voltage will be about 12V - V_diode = about 11.4V.
V_gs = V_gate - V_source = 0V - 11.4V = -11.4V.
This is more negative than -1.2V thus the MOSEFT will be ON ... driving V_source even higher in direction of +12V.
Klaus