A kinship diagram is a tool used mostly by anthropologists when they are conducting ethnographic fieldwork. It is one of the first steps taken towards integration and understanding the dynamics of a community or culture. It helps you remember names, nicknames, sexes and ages; which can contribute to a Census.
More long term though, its purpose is chiefly to grasp a better understanding of how everyone is related in your community. This could later play into observations of who and why some people dont work with others, which families practice which religion, the geographical dynamics of a community, and who forms which organizations.
In gathering the information, simply visit each household and ask them to tell you about their family. How many children do they have, what are their names and ages? Then, like a puzzle, start peicing it together. Write the age inside the triangle (for males) or circle (for females). Write names underneath each shape. At first it may be messy and perhaps overwhelming, but little by little one will be able to make a full diagram. Larger communities may require several kinship diagrams.