I pretty tired of the whole "diving" discussion. I think "diving is a cancer" is completely misplaced energy. I think most of the supposed dives are not dives at all. When players are moving at game speed, it does not take much contact to lose your balance. Sometimes, it does not take any contact. Just the act of avoiding contact can cause you fall over.
I think the Bale clip above is actually a good example. At Bale's speed, even a little contact (on his right heel) when his weight has already shifted to the wrong foot, means he is likely to go down. But, it is also not a foul. The contact was incidental and there was nothing the defender could do to avoid that incidental contact other than stop playing.
I do think embellishment is a problem and one which Luis is guilty of. But, he embellishes everything and that is part of what makes him an amazing player. Last week against Stoke, there was contact in the box. The contact probably was not a pen. And his flop was a little ridiculous, but there was contact and the referee was spot on. Embellishment yes. Simulation no. No penalty. No card.
I do think that sometimes players dive and when there is irrefutable evidence that a player intentionally dived - that there was no reason for the player to fall over - then it should be retroactively punished, but I think that bar needs to be extremely high.