Vox.com has an overview:
“Before there was Reddit, there was Digg. Digg used to be one of Silicon Valley’s hottest startups. Founded in late 2004, it became a sensation because it represented a new way for readers to find news stories: it pioneered the concept of social news aggregation. People loved the idea that the links on Digg’s popular home page were chosen by the votes of the users. Barely 18 months after he founded Digg, a 29-year-old Kevin Rose was grinning at the nation from the cover of Business Week. At its peak in 2009, the site got more than 30 million monthly visitors.
But then Digg’s fortunes turned south. The recession, management problems, and a botched software upgrade all contributed to Digg’s downfall. By 2012, things had gotten so bad that the digg.com domain name was sold off to a company called Betaworks for $500,000. Digg, it seemed, was dead.” Vox.com
For self-congratulatory details, and info about how Digg works, go their blog: http://blog.digg.com/.