The main point of the diagram is that there are really two kinds of fallacies. First, there are formal fallacies, which are inferences that are not deductively correct. Second, there are fallacies of induction, which are inductive arguments that are faulty or especially weak.
Formal fallacies are a category that technically includes induction. This can lead to errors when you hold an inductive argument up to deductive standards. For example, it is correct to argue that since the sun regularly has come up every morning, it will probably come up tomorrow morning as well. But it's not deductively true, so you could call it a fallacy if you wanted to be a smartass.
The boundaries between proper induction and fallacious induction is somewhat fuzzy, and I tried to represent this in the diagram. For example, argument from authority is a bit of a fallacy, since authorities are frequently wrong. However, if the authority is shown to represent expert opinion, and if our resources are limited enough that we cannot investigate very deeply for ourselves, the expert opinion might be acceptable. It could be very difficult to determine when inductive reasoning crosses that line into fallacious reasoning.
I also put a third category in there, assertions. Assertions are not fallacies or deductions, because they involve no inferences. Assertions can be useful in saving resources, since there's no point in advancing evidence or arguments for points we all agree on. They are also useful to understand the differences between our positions. They are not substitutes for arguments.
Earlier I mentioned mounting a critique of "name that fallacy"-style arguments. This is where my critique would begin. If all you have is a list of fallacies, and you don't distinguish between fallacies of induction and formal fallacies, then you're going to spot fallacies everywhere, even in good inductive arguments. Or rather, you're going to spot fallacies everywhere you cast a critical eye, which will mostly be on your opponents. This is a good way to get entrenched in your own beliefs, regardless of whether those beliefs are true or not.