A diffuse disc bulge refers to one of the discs in your spine. The discs separate the bones of your spine, called vertebrae, and provide cushion support as well as motion to the vertebrae. A diffuse bulge of one of these discs refers to the disc bulging out from all sides (right, left, front, and back).
Indenting the thecal sac means that that diffuse disc bulge is pushing the thecal sac such that being able to see that sac is obscured by the diffuse disc bulge. Thecal sac refers to the the "sac" which is a membrane (called dura mater) that contains the spinal cord and cerebrospinal fluid. All this statement implies is that the disc bulge is pushing the membrane that contains the spinal cord.
At each level in the spine where there is a disc, right and left nerve roots come out to innervate tissues in the body. The holes that they come out are called neural foramina. Without significant nerve root compression or canal stenosis means the canal has still not been narrowed by the diffuse disk bulge.
I hope this helps! Take care!