How does the diode protect the transistor in this circuit?

A side note, modern Bosch automotive relays now use a shunt across the coil, no diode. A diode is too slow in releasing relay contacts. Some may find it interesting the scope measured release times of a 12V relay:

No shunt, 2.2 ms break time
330 ohm shunt, 9 ms break time
680 ohm shunt, 6.2 ms break time
diode shunt, 17 ms break time