My guitar teacher showed me a chord progression that went like this:

Cmaj7 - Dmin7 - Emin7 - Fmaj7 - G7 - Amaj7 - Bmin7(flat 5) - Cmaj7

He called it a diatonic...something or other...I can't really remember what he called it. Anybody know anything about it? I really like the sound of it.
That isn't a diatonic scale. Every note is correct except the C# that you have in the Amaj7 chord. That chord should be Amin7. This 'progression' sounds good because it has an obvious tonal center and the chords built off of it(Cmaj) strengthen the tonality.

Anyways, that is just the C major scale harmonized. Basic, basic theory. If you are interested in learning how to come up with your own chord progressions and understand what your teacher is throwing at you then search for some theory articles.