Surface waves on liquids act as a dynamical phase grating for incident light. In this article, we revisit the classical method of probing such waves (wavelengths of the order of mm) as well as inherent properties of liquids and liquid films on liquids, using optical diffraction. A combination of simulation and experiment is proposed to trace out the surface wave profiles in various situations (eg. for one or more vertical, slightly immersed, electrically driven exciters). Subsequently, the surface tension and the spatial damping coefficient (related to viscosity) of a variety of liquids are measured carefully in order to gauge the efficiency of measuring liquid properties using this optical probe. The final set of results deal with liquid films where dispersion relations, surface and interface modes, interfacial tension and related issues are investigated in some detail, both theoretically and experimentally. On the whole, our observations and analysis seem to support the claim that this simple, low-cost apparatus is capable of providing a wealth of information on liquids and liquid surface waves in a non-destructive way.