The forward voltage (VF) of the diode at the bottom provides 750 mV of bias to hold the center diode at the threshold of conduction.
Thus, a signal having an amplitude of about VF (the derivative of the input square wave in this case, whose maximum amplitude is of about 500 mV) can be still correctly rectified.
To see that, compare the middle diode output vs the top (unbiased) diode output.
Biasing and biased diodes must be identical for this circuit to properly work.
