I'm having a hard time even figuring out how to write a Google search to figure this out.
If you click on a story on Digg it puts it all in the URL like digg.com/news/science/why_the_world_is_tilted
, instead of digg.com/reader.php?r=news&s=science&t=why_the_world_is_tilted
I'm pretty sure they don't have several million subfolders, and I recall reading something 4 years ago that explained how it works, but I don't remember enough to look it up again.