In Painter 7 watercolor, the diffusion effect is controled by multiple parameters.

I start with Soft Camel variant (Dab Type: Water Color Camel Hair), with Dry Rate lowered from 40% to 10%. This slows the drying process.

The settings are as follows--Texture: Basic Paper, Opacity: 16%, Feature: 3.3, Resat: 100%, Bleed: 0%, Wetness: 139, Pickup: 15%, Dry Rate: 10%, Evap Thresh: 66%, Diffuse Amt: 68%, Cap Factor: 0, Grain Soak-In: 0%.

In order to show how different settings influence the interaction of two strokes, I have used the stroke pattern to the right for the examples on this page. (I actually placed this image beneath the Water Color Layer and painted along the lines.)

Lowering Evaporation Threshold from 66% to 10% makes the water to spread farther, carrying the color particles with it. This creates a fringe where strokes overlap.

I raise Wetness from 139 to 722. The fringe is formed farther away from the original stroke.

Pickup is raised from 15% to 95%. Color particles on the surface are picked up into water to be carried again. But they seem to turn into hard particles that are not water-soluble.
I set Resat to 10% and Bleed to 90%, as it is usually done in Painter to make brush color mix with existing colors. And yes, I used the same colors as the above samples.

About the strange behavior of Bleed parameter on Painter 7's new Water Color brushes, see Bleed and Pickup.