Loads of Diddy clips and soundbites have been subject to social media scrutiny since his federal sex trafficking and racketeering trial kicked off -- but probably none bigger than his infamous "Drink Champs" interview with Fabolous and Jadakiss!!!

N.O.R.E. hit "The Breakfast Club" on Monday to clear up the viral fiasco where Diddy made some eyebrow-raising comments towards the star NYC MCs ... something about "loving when they're scraping and scrambling for sh*t."

The clip occurred nearly 8 years ago, and N.O.R.E. says he's still getting tagged in it to this day -- but says there's a perfectly good explanation for the shenanigans!!!

N.O.R.E. invited Diddy to the "Drink Champs" segment to boost all the New Yorkness happening in the moment ... Fab and Jada had just released their "Freddy Vs. Jason" joint album and Diddy's boy and fashion stylist Groovey Lew, was also in the building celebrating his birthday.

N.O.R.E. says Diddy overheard someone else say "daddy" so he figured that was the slang they were operating with, but says it wasn't a pass thrown Fabolous' way -- it was flak for the Brooklyn rapper being caught red-handed not drinking CÎROC, despite having an endorsement deal with the vodka brand.

As a character witness, N.O.R.E. also can't attest to "the monster" that the prosecution is pinning on Diddy ... just as the jury makes their own calculations from the trial.