Why did Diego Sanchez move back to the Welterweight division?

155 is too far below his natural weight, he had to cut too much to get there.

Sanchez is not that small of a fighter, and cutting to 155 has been too much strain on his body to look good, perform, and compete well. Penn was the best fight for him as a lightweight, and Penn has cleaned out his division. However, Sanchez would be dominant over the rest of the division too, but right now he can't beat Penn.

At the moment, the welterweight division offers him better competition.

Weight cutting is extremely hard on the body and Diego isn't exactly a small fighter, even at welterweight. He made the cut because his team told him to and Dana promised him a title shot he if looked good that weight class. He took the opportunity but now is returning to a weightclass where he was ranked in the top 5 when he made the cut.

Also, don't be surprised if Diego stays at LW for one more fight. A rematch with Florian would be huge for the UFC and makes sense as the co-main event for the Boston card scheduled for August.

It's because Sanchez had never taken a beating like that at WW. He fought the top ten guys in WW and was always in the fight but against Penn...not so much

sure and no. he had KO means and a powerful all-around sport yet is only to small to compete with the wrestling expertise of suitable welterweights. Kos and fitch beat him and GSP would desire to be the main suitable wrestler in MMA

Because BJ Penn dominated him and made Sanchez look like a child.

After the beating he took from BJ I think he would rather fight heavyweight before he had to fight him again.