It insinuates that the witness is unqualified to make the statements he's making, using logic of the form "if you don't have a master's degree you likely can't be an expert in this field."
I would have loved to response to ""You never completed a master's degree, correct?" he asked Diffie." with "Just like Bill Gates and Steve Jobs, no I don't have a masters degree" (well apparently Bill eventually got one...). I assume the judge would be unhappy with this, which strikes me as unfair - surely I can defend my reputation?
Note the very important difference between presenting a logical argument and serving as a witness for trial. When you present a logical argument, it stands on its own. But a witness isn't presenting reasoning for the jury to follow. His testimony doesn't stand on its own. A witness expresses an opinion or recollection of events for the jury to believe. The jury's job is to determine which witness they find more credible.
Facts that are ad hominem in the world of logical argument are vital determinants of credibility in the world of witness testimony. They help juries figure out who to believe. Thus the logic isn't "if you don't have a master's degree you likely can't be an expert in this field" but rather "the guy with the PhD is more likely to be a credible expert in this field." Which is a reasonable presumption. It's the job of the side presenting an expert with unique experience who doesn't have marks of academic qualification to convince the jury of the person's expertise regardless of the traditional indicators.
I'd be tempted to use the person within the organisation who's done lots of published research even without the diploma. But you make a good point - trials are about persuading the jury.
I would have loved to response to ""You never completed a master's degree, correct?" he asked Diffie." with "Just like Bill Gates and Steve Jobs, no I don't have a masters degree" (well apparently Bill eventually got one...). I assume the judge would be unhappy with this, which strikes me as unfair - surely I can defend my reputation?