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Diabetic macular edema (DME) is a leading cause of vision impairment in diabetic patients, necessitating a timely and accurate diagnosis. This paper proposes a comprehensive system for DME grading using retinal fundus images. Our approach integrates multiple deep learning modules, each designed to address key aspects of the diagnostic process. The first module employs the ConvUNeXt model for segmenting hard exudates (HaEx), crucial indicators of DME. The second module uses RetinaNet for precise optic disc (OD) localization, which is essential for subsequent macula localization. The third module refines macula localization, leveraging preprocessing techniques to enhance image clarity. Finally, our system consolidates these results to provide interpretable DME grading. Experimental evaluations were conducted on the Messidor dataset, demonstrating the system's robust performance. The HaEx segmentation module achieved a mean IoU of 70.5% and a Dice coefficient of 0.64. The OD localization module showed perfect accuracy, recall, and precision at 1.0. For macula localization, our method satisfied the 1R criterion with 99.38% accuracy. The DME grading module achieved an overall accuracy of 91.12%, with an AUC of 0.9334. Our method offers a balanced performance across accuracy, sensitivity, and specificity compared to other non-interpretable and partially interpretable methods. [ABSTRACT FROM AUTHOR]