We are given that \( \mathbf{w} \in \mathbb{R}^3 \) lies on the unit sphere, i.e., \( \| \mathbf{w} \| = 1 \). This implies that the set \( S \) represents all unit vectors in \( \mathbb{R}^3 \), which form the surface of a sphere.
However, the diagonalizability condition changes the context of the problem. This condition implies that the transformation described by the matrix is not necessarily related to a closed, bounded space like the unit sphere, but instead represents a linear transformation that may result in a set that is neither compact nor connected. This typically happens when the transformation leads to vectors that can "stretch" or "move apart," breaking compactness and connectedness.
Step 1: Compactness
A set is compact if it is both closed and bounded.
The condition that \( \| \mathbf{w} \| = 1 \) suggests that \( S \) should be bounded.
However, the diagonalizability condition implies that this transformation leads to non-compactness, as the transformation might extend beyond the unit sphere's boundary.
Step 2: Connectedness
A set is connected if any two points in the set can be joined by a continuous path.
The transformation described by diagonalizability may separate points in the set, leading to a situation where the set is no longer connected.
Thus, combining these observations, we conclude that the set \( S \) is neither compact nor connected. Hence, the correct answer is:
\[
\boxed{S \text{ is neither compact nor connected.}}
\]