X-ray Free-Electron-Lasers (XFEL) as the Linac Coherent Light Source (LCLS) in the USA, SACLA in Japan, and the European XFEL under construction in Germany are 4th generation light sources which allow research of at the same time extremely small structures (Ångström resolution) and extremely fast phenomena (femtosecond resolution). Unlike the pulses from a conventional optical laser, the radiation in these sources is created by the Self-Amplified Spontaneous Emission (SASE) process when electron bunches pass through very long segmented undulators. The shot noise at the origin of this process leads to significant pulse-to-pulse variations of pulse intensity, spectrum, wavefront, temporal properties etc. so that for user experiments an online monitoring of these properties is mandatory. Also, the adjustment of the long segmented undulators requires dedicated diagnostics such as an undulator commissioning spectrometer and spontaneous radiation analysis. The extremely high brilliance and resulting single-shot damage issue are difficult to handle for any XFEL diagnostics. Apart from the large energy range of operation of the facility from 280 eV to 25 keV in FEL fundamental, the particular challenge for the European XFEL diagnostics is the high intra bunch train photon pulse repetition rate of 4.5 MHz, potentially causing additional damage by high heat loads and making shot-to-shot diagnostics very demanding. This contribution reports on the facility concepts, recent progress in instrumentation development, and the optimization of diagnostics performance with respect to resolution/accuracy, shot-to-shot capabilities and energy range.