Under what circumstances does f/22 cause diffraction?

Pretty much all of them. All apertures cause diffraction due to the interaction of the wave nature of light with the edges of the aperture.

But the real question is, "When does f/22 cause noticeable diffraction?"

The aperture at which diffraction is first detectable at the pixel level is the point we define as the Diffraction Limited Aperture, or DLA.

On digital cameras the Diffraction Limited Aperture (DLA) is determined by the size of the sensor's pixels.

This is because it is related to the size of the circle of confusion for a given aperture. With a digital sensor the DLA is the aperture at which the size of the circle of confusion becomes larger than the sensor pixels and begins to visibly affect image sharpness at the pixel level. Diffraction at the DLA is barely visible when viewed at 100% (1 image pixel = 1 display pixel) on a display with pixels large enough for the viewer to resolve individual pixels. As sensor pixel density increases, each pixel gets smaller and the DLA moves to a lower f-number.

DLA does not mean that narrower apertures should not be used.

It is where image sharpness begins to be compromised for increased DOF. Higher resolution sensors generally continue to deliver more detail well beyond the DLA than lower resolution sensors until the "Diffraction Cutoff Frequency" is reached (a much narrower aperture). The progression from sharp to soft is not an abrupt one.

DLA can vary greatly from one camera to the next. Among Canon's current lineup the highest DLA is f/10.6 for the 1D X Mark III and R6 Mark II, both with 20MP on a full frame (36X24mm) sensor and ≈6.6µm pixel pitch. The lowest DLA in Canon land is currently f/5.2 for the 32.5MP APS-C R7 and M6 Mark II with pixel pitch of 3.2µm. Your OM-D EM-1 Mark III has a 20.4MP Micro Four-Thirds sensor with pixel pitch of 3.32µm. That puts the DLA for your camera at around f/5.3.

What happens when you select an aperture beyond the DLA?

At the DLA diffraction begins to negatively affect sharpness at the absolute point of focus. Diffraction at the DLA is barely visible when viewed at 100% (1 image pixel = 1 screen pixel) on a display with pixels large enough to be at the threshold of the viewer's eyes ability to resolve.

In exchange the narrower aperture increases the depth of field that is in nominal focus on either side of the absolute point of focus. There are techniques that allow you to maximize depth of field using the widest aperture possible. Learning how to calculate hyper-focal distance (or carrying a chart for each focal length you use) allows you to place the point of focus as close to the camera as possible while allowing for everything beyond that point all the way to infinity to remain acceptably in focus. At close distances and wide apertures the depth of field is about equally in front of and behind the point of focus. As the subject distance increases and/or the aperture narrows, a larger and larger percentage of the DOF is behind the point of focus. Here is a link to a DOF calculator you can use to illustrate this.

When does using f/22 become a noticeable issue?

It depends.

• On a camera with larger pixels it will be less of an issue than on a camera with more pixels crammed onto a smaller sensor.
• If the resulting image is going to be sized for web viewing at relatively low dpi and high compression it won't be much, if any of a factor.
• If the image is printed at relatively small sizes it won't be very much of an issue.
• If, on the other hand, the image is going to be used for a high resolution large sized print or cropped heavily when displayed on a monitor it will become much more of an issue.
• If you're pixel peeping at 100% while holding a magnifying glass above the screen, it will be an extreme issue.