I can understand the mathematical explanation for the reason why there should be a length contraction, but I fail to understand it intuitively. That is why I tried to explain it using spacetime diagrams, but for some reason, I was unable to do so.
Let us use the following procedure to measure the length of the rod from S's reference frame: S moves with $\vec{v} = v \hat x$ and sets it's watch to $t = 0$ when it is in one end of the rod, and looks at it's watch when it is in the other end of the rod and sets $t = t_2$. Let us also put one end of the rod, the one which $S$ visits first, to the origin of $S'$. We have two events $$e_1: \quad (t_1', x_1') = (t_1', 0) \quad and \quad (t_1, x_1) = (0,0),$$ $$e_2. \quad (t_2', x_2') = (t_2', L_0)) \quad and \quad (t_2, x_2 = (t_2, 0))$$ Note that, the rod is stationary wrt S' and both events happen at the origin of S wrt S.
Since we are relying on $t_2$ to calculate the length of the rod, graphically (see the above figure), $$t_2 = \sqrt{L_0^2 + (t_2')^2}.$$
If we just cheat a bit (to see whether we are on the right track) and use Lorentz transformations, we can see that $t_2' = \frac{t_2}{\sqrt{1-v^2}}$, which means that the above equation implies $$t_2 = \sqrt{v^2 + 1}t_2' \quad \Rightarrow \quad x_2 = \sqrt{v^2 + 1}L_o,$$ which is clearly wrong.
Question:
What am I doing wrong?