When the dig engages, it will cut power to which axle you wish. So lets say you engage front dig, which disengages rear power. The rear will totally lock up since it is a worm gear (on the losi), and drag ass behind. This allows you to turn the front and "burn" or dig around. If the rear has any traction it will allow a tighter turn. Here is a perfect video showing normal locked turning vs dig turning.
http://www.youtube.com/watch?v=m_cZ_pwTczo On higher traction flat surfaces with even weight distribution you could get tighter turning still.
It only works well on flat or surfaces where the front is up hill. When you are facing downhill you must engage rear dig and lock the front axle. This will make the rear axle fall down the slope if the front has enough traction to stay put.
Then newest, yet to be available item is the unlockable diff. It would allow tight turning without dig as long as all four tires are on the ground. It would be much more predictable until a tire lost traction or lifted from the ground. If I had to choose, I would take dig over unlockable diffs for a comp crawler, mostly because I have been using dual ESC dig in comps for over three years now. I would choose unlockable diffs on a rock racer.