We can talk about whether or not a countably infinite sequence S contains a given element x. We iterate through each element s of S one-by-one. If x is contained in S, then eventually we will find an element s such that s = x. But if x is not contained in S, then we will keep iterating for all eternity.
For all countably infinite sets, we can always produce such a sequence, where the iteration will eventually halt if and only if the element is contained in the set. But for the set of real numbers, no matter what sequence we choose, we will never ever find the diagonalized number in our sequence. That's why we call the set of real numbers uncountable.
You dispute that we can't physically count through all of the infinite elements in the real world. But math has no problem talking about what would hypothetically happen if we were to try. It lets us prove ahead of time that certain events will eventually happen if we iterate long enough, and other events will never ever happen.