The diameter is measured straight across the wheel, and it is the surface that the inner bead of the tire mounts to. If your tire is not deformed, lay it flat on the floor and measure the inside of the bead straight across to the inside of the bead on the other side.
A car 15" wheel will measure 16" outside lip edge to outside lip edge, and the inside edge will measure 14". You do not average it, but it is the inside bead area that is measured. Some custom wheels may have a larger outer lip, and might measure 17", but you are still only measuring where the bead sits.