"What does 'expanding the determinant along the diagonal' mean?"
$$A_{n \times n} - \lambda I_{n \times n} =
\begin{pmatrix}
a_{11} - \lambda & a_{12} & \cdots & a_{1n} \\
a_{21} & a_{22} - \lambda & \cdots & a_{2n} \\
\vdots & \vdots & \ddots & \vdots \\
a_{n1} & a_{n2} & \cdots & a_{nn} - \lambda
\end{pmatrix}$$
The "leading term" from Laplace expansion of $\det(A_{n \times n} - \lambda I_{n \times n})$ is the product of the main diagonal entries,
$$\det(A_{n \times n} - \lambda I_{n \times n}) = (a_{11} - \lambda)\cdots (a_{nn} - \lambda) + \cdots.$$
For instance, if the matrix were diagonal, then $\cdots$ would be $0$ and this would be the entirety of the determinant. In general, this is the only term that will contribute $\lambda^n$; all the rest will have at most $n-1$ copies of $\lambda$. Hence
$$\det(A_{n \times n} - \lambda I_{n \times n}) = (-\lambda)^n + \cdots = (-1)^n \lambda^n + \cdots.$$
You can also just do the $n=1$ case, which makes it very clear.