We demonstrate that nonlinear computing can be achieved with a single linear diffractive surface under coherent illumination. We introduce a compact encoder-decoder co-localization (E+D) architecture in which an input-dependent dynamic encoder and a static optimized decoder are integrated within the same phase-only diffractive plane. Following free-space propagation, coherent interference between the encoder and decoder fields, combined with intensity detection, generates programmable nonlinear input-output mappings without requiring nonlinear optical materials or multiple diffractive layers. We prove that the proposed E+D optical processor is a universal approximator for arbitrary real-valued band-limited nonlinear functions and identify the physical factors governing its approximation fidelity, including the decoder degrees-of-freedom, detector aperture, and axial propagation distance. Crucially, we demonstrate that introducing a trained, frozen phase bias to the encoder region systematically enhances functional expressivity, providing robustness against coarse phase quantization on spatial light modulators. Using this framework, we accurately synthesize diverse nonlinear functions, including commonly used neural network activation functions and complex-valued nonlinear functions. Finally, we experimentally validate the proposed approach using a visible-light optical set-up trained through in situ learning, demonstrating the parallel approximation of 9 nonlinear functions in a single optical forward pass. By collapsing nonlinear optical computation into a single diffractive surface, the E+D architecture substantially reduces hardware and alignment complexity while preserving powerful function-approximation capabilities, providing a compact and scalable framework for analog information processing.