Why Water + Lava = cobblestone in minecraft?

Because Lettuce + Water in real life = Wet Lettuce.

Because you need to be on diamond level to get obsidian anything above diamond level is a low chance of getting obsidian

Don't use a waterfall to do the trick.
First, make a well
Then put the LAVA FIRST
Then add water to the area where you applied the source of lava

The the lava must be source-block lava to from obsidian. If the Lava is not a source-block, such as a lava waterfall, it will turn into cobblestone instead.

Dumping a bucket of water on a lava lake is usually the best way to get a lot of obsidian blocks. Just be careful when you mine it because the lake may have been more than one square deep and obsidian that falls into lava is destroyed.

Logic.