Digg just wasn't big enough. Once these networks get to a certain size they're unkillable. Look at all the turmoil reddit went through, a hated redesign, killed 3rd party apps, a whole protest movement, none of it mattered. People bring up digg and friendster but that was 20 years ago when these networks were way smaller. No top 10 social network has died since then.
Reddit had a much better system for commentary, as opposed to just reacting to URLs.
Sure, you could comment on Digg, but it was a pain and not good for conversations, and that meant there was less to keep people around when it seemed like the company was started to put their finger on the scales for URL-submissions.
It wasn't a pain on Digg, and it was equally good at conversations.
Reddit did not win due to it's features, it won because Digg said it doesn't matter what the users think, we will redesign the site and change how it works regardless of the majority telling us they don't want it.
Reddit demolished Digg because it offered people fiefs rather than just karma.