North-South are vulnerable and East starts the auction with 1♥.
Should South overcall? There are good reasons to do so; it makes life more difficult for the opponents, directs the defense and may lead to a good contract. In this case it would probably lead to the making Spade game. I would not criticise a pass, but the point is that it's a bidder's game.
Let's suppose you are South and pass, and it proceeds 1NT - Pass - 2♣. You overcall 2♦ now because it shows a weaker hand. It then goes 3♣ - Pass - 3NT - All Pass. North leads the ♦J, covered by the Q.
This is the critical moment. If partner had 2 diamonds and the ♥A you must duck. If they had J109, J108 or J98 you must also duck or the suit will block.
But it's right to assume they had a doubleton because they did not support your suit. This is just one of many reasons to support partner with 3 cards. If your partner can count on you for this then they can make better decisions.
Of course you must duck with an encouraging card according to your signalling methods.
Also interestingly, you can take the first trick and still beat the contract by switching to spades. Taking and continuing diamonds is the disaster, losing a double game swing.