Improve README with simplified mermaid diagram and structured sections (#45)

* Improve README with mermaid diagram and structured sections

Replace static architecture diagram with maintainable mermaid flowchart showing the multiplexer architecture. Add structured sections for Overview, Features, Configuration, Testing, and Troubleshooting to better explain the extension's purpose and usage.

🤖 Generated with [Claude Code](https://claude.com/claude-code)

Co-Authored-By: Claude <noreply@anthropic.com>

* Simplify mermaid diagram for better readability

Replace complex nested subgraphs with a simple, clear flowchart that matches the clarity of the original static diagram. Add note about subscription ID rewriting feature.

🤖 Generated with [Claude Code](https://claude.com/claude-code)

Co-Authored-By: Claude <noreply@anthropic.com>

---------

Co-authored-by: Claude <noreply@anthropic.com>

README.md

@@ -2,14 +2,120 @@
 
 <small>For more about LNBits extension check [this tutorial](https://github.com/lnbits/lnbits/wiki/LNbits-Extensions)</small>
 
-`nostrclient` is an always-on extension that can open multiple connections to nostr relays and act as a multiplexer for other clients: You open a single websocket to `nostrclient` which then sends the data to multiple relays. The responses from these relays are then sent back to the client.
+## Overview
 
-![2023-03-08 18 11 07](https://user-images.githubusercontent.com/93376500/225265727-369f0f8a-196e-41df-a0d1-98b50a0228be.jpg)
+`nostrclient` is an always-on Nostr relay multiplexer that simplifies connecting to multiple Nostr relays. Instead of your Nostr client managing connections to dozens of relays, you connect to a single WebSocket endpoint provided by `nostrclient`, which then fans out your requests to all configured relays and aggregates the responses back to you.
 
-### Troubleshoot
+### Why Use This?
 
-The `Test Endpoint` functionality heps the user to check that the `nostrclient` web-socket endpoint works as expected.
+- **Simplified Client Configuration** - Connect to one endpoint instead of managing multiple relay connections
+- **Always-On Connectivity** - Your LNbits instance maintains persistent connections to relays
+- **Resource Efficient** - Share relay connections across multiple clients
+- **Subscription Management** - Automatic subscription ID rewriting prevents conflicts between clients
 
-The LNbits user can DM itself (or a temp account) from `nostrclient` and verify that the messages are sent and received correctly.
+## Architecture
+
+```mermaid
+flowchart LR
+    A[Client A] -->|WebSocket| N
+    B[Client B] -->|WebSocket| N
+    C[Client C] -->|WebSocket| N
+
+    N[nostrclient<br/>Router] -->|Fan Out| R1[Relay A]
+    N -->|Fan Out| R2[Relay B]
+    N -->|Fan Out| R3[Relay C]
+    N -->|Fan Out| R4[Relay D]
+
+    R1 -.->|Aggregate| N
+    R2 -.->|Aggregate| N
+    R3 -.->|Aggregate| N
+    R4 -.->|Aggregate| N
+```
+
+**Key Feature:** The router rewrites subscription IDs to prevent conflicts when multiple clients use the same IDs.
+
+## Features
+
+- **Multi-Relay Multiplexing** - Connect to multiple Nostr relays through a single WebSocket
+- **Public & Private Endpoints** - Configurable public and private WebSocket access
+- **Automatic Reconnection** - Failed relays are automatically retried with exponential backoff
+- **Subscription Deduplication** - Events are deduplicated before being sent to clients
+- **Health Monitoring** - Track relay connection status, latency, and error rates
+- **Test Endpoint** - Send test messages to verify your setup is working
+
+## How It Works
+
+1. **Client Connection** - Your Nostr client connects to the nostrclient WebSocket endpoint
+2. **Subscription Rewriting** - Each subscription ID is rewritten to prevent conflicts between multiple clients
+3. **Fan-Out** - Subscription requests are sent to all configured relays
+4. **Aggregation** - Events from all relays are collected and deduplicated
+5. **Response** - Events are sent back to the client with the original subscription ID
+
+## Configuration
+
+### WebSocket Endpoints
+
+- **Public Endpoint**: `/api/v1/relay` - Available to anyone (if enabled)
+- **Private Endpoint**: `/api/v1/{encrypted_id}` - Requires valid encrypted endpoint ID
+
+Configure endpoint access in the extension settings:
+- `private_ws` - Enable/disable private WebSocket access
+- `public_ws` - Enable/disable public WebSocket access
+
+### Adding Relays
+
+Use the nostrclient UI to add/remove Nostr relays. The extension will automatically:
+- Connect to new relays
+- Publish existing subscriptions to new relays
+- Monitor relay health and reconnect as needed
+
+## Testing
+
+### Test Endpoint Functionality
+
+The `Test Endpoint` feature helps verify that your nostrclient WebSocket endpoint works correctly.
+
+**How to test:**
+1. Navigate to the nostrclient extension in LNbits
+2. Use the Test Endpoint feature
+3. Send a DM to yourself (or a temporary account)
+4. Verify that messages are sent and received correctly
 
 https://user-images.githubusercontent.com/2951406/236780745-929c33c2-2502-49be-84a3-db02a7aabc0e.mp4
+
+## Troubleshooting
+
+### Connection Issues
+
+- **Check relay status** - View relay health in the nostrclient UI
+- **Verify endpoint configuration** - Ensure public_ws or private_ws is enabled
+- **Check logs** - Review LNbits logs for connection errors
+
+### Subscription Not Receiving Events
+
+- **Verify relays are connected** - Check the relay status in the UI
+- **Test with known event** - Use the Test Endpoint to verify connectivity
+- **Check relay compatibility** - Some relays may not support all Nostr features
+
+## Development
+
+This extension uses `uv` for dependency management.
+
+### Quick Start
+
+```bash
+# Format code
+make format
+
+# Run type checks and linting
+make check
+
+# Run tests
+make test
+```
+
+For more development commands, see the [Makefile](./Makefile).
+
+## License
+
+MIT License - see [LICENSE](./LICENSE)