The digg_skin option controls the look at the button.
If omitted the button defaults to a standard digg button (much like the one you see on Digg itself).
If specified as 'compact', then a smaller horizontal visual design is used that will fit better into a list of links.
If specified as 'icon', then only a 16x16 digger icon is returned.
This 'icon' skin obviously doesn't have room for a digg button, but will still automatically choose whether to take the user to a submit page, or to the permalink of the story.
It also will provide the current digg count of the story when the cursor hovers over it.