Magnetic diffusion plays a vital role in star formation. We trace its influence from interstellar cloud scales down to star-disk scales. On both scales, we find that magnetic diffusion can be significantly enhanced by the buildup of strong gradients in magnetic field structure. Large scale nonlinear flows can create compressed cloud layers within which ambipolar diffusion occurs rapidly. However, in the flux-freezing limit that may be applicable to photoionized molecular cloud envelopes, supersonic motions can persist for long times if driven by an externally generated magnetic field that corresponds to a subcritical mass-to-flux ratio. In the case of protostellar accretion, rapid magnetic diffusion (through Ohmic dissipation with additional support from ambipolar diffusion) near the protostar causes dramatic magnetic flux loss. By doing so, it also allows the formation of a centrifugal disk, thereby avoiding the magnetic braking catastrophe.