We study stem-terminally differentiated (TD) lineages in small niches where demographic noise from discrete division and death events is non-negligible. Starting from a mechanistic five-channel, density-dependent CTMC (symmetric self-renewal, symmetric differentiation, asymmetric division, dedifferentiation, TD death), we derive its mean-field limit and a functional CLT, obtaining a chemical Langevin diffusion whose explicit state-dependent covariance exactly matches the CTMC's aggregated channel-wise infinitesimal covariances. Within this diffusion approximation we remove the dedifferentiation flux and obtain a sharp dichotomy: in subcritical regimes the stem coordinate becomes extinct asymptotically almost surely, whereas in supercritical regimes polynomial moments diverge exponentially. This identifies, at the diffusion level, a structural failure mode of strictly hierarchical lineages under demographic fluctuations and clarifies how a cyclic return flux can rescue homeostasis. For interpretation we also derive an exact totals ODE backbone from a damage-structured transport model and obtain two steady-state constraints (ratio and equalization laws) linking compartment ratios to turnover and balancing dedifferentiation against fate bias. Numerical experiments corroborate the $Ω^{-1/2}$ fluctuation scaling, illustrate the pathology, and contrast theorem-regime global convergence with threshold (Allee-type) behaviour outside the theorem hypotheses.