I will never accept that cheating, which is what diving is, should be tolerated as part of the game. Davies dived at the Etihad and the ref was correct. It was embarrassing as he was wearing an Everton shirt for all the world to see.. Their player also cheated to get Schneiderlin sent off, that is City's business. Both perpetrators should be ashamed. When someone dives playing against us, all hell breaks loose and abuse follows. Some players, like Baines for example would not lower themselves to do it. Davies is immature and hopefully Koeman will set him straight.
Every player does it to some degree. Baines even did it to a degree with Walker's first yellow card. Walker didn't make much contact at all really.
There is no escaping it in the modern game until UEFA bring in some sort of retrospective punishment that would be enough of a deterrent. Maybe they embellish the knock so that they time waste, or trying to get the opposition player in trouble, or they're trying to win a penalty or free kick, or maybe they're just tired and take the contact for a breather. There are many degrees to it.
As for Davies, I think he took the contact given the position on the pitch and the amount of players in front of him. The opposition player definitely tried to impede his run, maybe he wasn't trying to bring him down but just put Davies off his run enough to slow him up and gain an advantage that way. Was that sort of action really much better? Both were trying to bend the rules to their advantage.