I think good instrumental teaching is a mixture between knowledge of one's instrument, patience and an understanding of how people learn. The last two are either instinctive on the part of the teacher, consciously learned, or the result of years of experience. On our CTABRSM course we were told: when a student fails to learn, always look to yourself first. We studied different learning styles and grew to recognise that there as as many different ways of learning as there are people. This can present problems in a group teaching situation, obviously!
I can see how an instrumentalist can have a performance diploma but still be lacking in their teaching skills (they may not have the instinct for it or have learned the skills necessary), but with a teaching diploma they should certainly have some idea. However, I've heard from not a few people that the CTABRSM can actually be a better preparation for being an instrument teacher than a teaching diploma (don't ask me why).
In my own experience the skills I learnt on the CTABRSM course for teaching certain detailed aspects of teaching (the finer aspects of the the bow-hold, for example) have been invaluable and I now base my teaching on them constantly. I also do a lot of reading up of various methods and try different things out constantly - what may work for one student may not work for another.
I've also realised that a teacher can be a fantastic player but if they don't know these aspects of teaching, may just teach the way they were taught, which may be a distant memory at best and which may not work for everyone in any case.
You also need to be prepared to go very slowly and go over and over something until it's understood -you need vast amounts of patience for this,and never to show the slightest annoyance even if you feel it (I no longer feel it, thank goodness!). You need to be able to get right into the student's head and understand why they don't understand something that you find perfectly obvious - like the student who hadn't understood that the sticks on the notes going one way or another do it for reasons of space on the stave, not for any other reason. Or that notes aren't randomly placed on the stave but go up like a ladder: space, line, space, line. Or that with the violinthe notes get higher as your fingers get nearer you although you may logically think they're getting lower. A lot of the skill of being a teacher is to be adaptable and to go at their pace, not your preferred pace.
I'm currently astonished by a new pupil who is able to move at a rate of knots - I'm not used to this!!! So I'm having to go against usual practice and move at quite a fast pace to keep her constantly challenged. Example: six days ago she had her first ever violin lesson. I taught her how to hold the violin in banjo position and pluck, first open strings. She managed that immediately, so I showed her how to place first finger. She got that straight away so I showed her second finger, then third. Then 1st, 2nd, 3rd on the A string as well. She came back today able to pluck every tune in the book, perfectly in tune.

So today I showed her how to pluck with the violin on her shoulder and then how to hold the bow (she got it immediately!!!). So then she started bowing the pieces she learned to pluck last week in her practice and before the hour was up she was able to play a tune using all the notes on both strings, with the bow, with a nice tone. I was totally gobsmacked to put it frankly. So she's gone away to practise all those and I can't wait for next week! What an extraordinary student - she seems to have the ability to listen to everything, observe and then put it into practice, completely correctly, or correcting herself immediately if she realises it isn't quite right. She's Swedish - I wonder if their great education system up there has helped? Probably - either that or she's naturally brilliant - or both.
Perhaps some teachers just can't deal with the fact that not all students are like that - in fact the vast majority of students are not like that - and we just have to slow down and be prepared to operate at a much slower pace - little steps all the time, while constantly checking to make sure the student has completely understood everything. It does take time, training, experience and lots of it.
As a teacher yourself, I'd say do a lot of reading up of various teaching methods and keep it all in a file, referring to it often. Try different ideas out and see how they work and always make sure your students feel they can stop you at any moment and ask you to explain something again if they haven't quite understood it.
Oops got to go!
Violinia