A tempered glass protector will take more shock than the glass on the screen, and will absorb a little shock if it shatters. But it's still not hard enough to withstand carbide particles (produced by fire, so the atmosphere is full of them), let alone something as hard as diamond. They're scratch-resistant, and more than Gorilla glass (Gorilla glass is about 6.7, tempered glass is 8, carbide is 9 and diamond, which defines the scale, is 10), but not scratchproof.
Do they work? Yes. Does an Otterbox Defender protect the screen from scratching and dropping? Yes, and better, since the rest of the phone is also protected against shock. (Some people claim that the screen is less sensitive in a Defender case - I've never noticed that. ) The downside is the price - 5 times the price of a tempered glass protector. (Then again, how do you know that the glass protector you get is really tempered, not just hard glass?)
The other problem with tempered glass is metal. If metal comes in contact with the edges, you'll see why tempered glass is safe - it crumbles into little squares that won't slice you up.